TripAdvisor (TRIP - Free Report) is a popular online travel research company. The company features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages, and travel guides. The sites operate in many countries worldwide, including China under daodao.com. The company has two segments, Hotel and Other. The stock is the Bear of the Day after it recently became a Zacks Rank #5 (Strong Sell) because of falling estimates after a poor earnings in early in August.
TripAdvisor was founded in 2000 and is based in Needham, Massachusetts where it employs 3,300. The company has a market cap of $9 billion and a Forward PE of 54. The stock sports Zacks Style Scores of “F” in Value because of the high PE. The stock is down over 20% this year, after a series of missed EPS reports and continued revisions lower to estimates.
The company reported Q2 EPS on August 3rd, where it missed on both the top and bottom line. The 10% miss on EPS was the seventh miss in the last nine quarters. Over this time period, the stock has fallen from $110 a share to $60. Some might view the stock as a bargain, but given its high valuation and falling estimates, the stock might have further to fall.
TripAdvisor will report earnings on November 3rd. According to analysts, investors should be concerned about the report, especially the forward looking guidance. Over the last 90 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 31%, from $1.27 to $1.14. For next year, estimates are now seen at $1.50, down from $1.69 or 11%. If this trend continues and the company disappoints again in November, expect the stock the head to the $50 area.
Because of the falling estimates brokers are taking their price targets lower including:
-Cut at JPMorgan to $62 from $65.
-Cut at Deutshce Bank to Hold from Buy, PT cut to $63 from $71,
-Sell at Stifel, with a $53 target.
Missing on EPS, falling estimates and broker downgrades are not a recipe for higher stock prices. Investors should shy away and even consider shorting into the report.
A Better Option
MakeMyTrip (MMYT - Free Report) is a Zacks Rank #1 (Strong Buy) that investors should consider as an alternative. The company is an online travel service company which offers travel products and solutions in India and the United States.It was founded in 2000, employs over 1900 and is headquartered in India.
MakeMyTrip has a market cap of $900 million and is coming off an impressive earnings report that cause the stock to jump 20% in just a couple months. Estimates for the company are moving in the right direction for fiscal year 2017 and 2018, showing double digit revisions higher.
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