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Bear of the Day: TripAdvisor (TRIP)

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TripAdvisor, Inc. (TRIP - Free Report) has been investing in its future but that means revenues, and earnings growth, are taking a hit. This Zacks Rank #5 (Strong Sell) had its 2017 estimates cut in the last month.

TripAdvisor is the largest travel site in the world, providing 465 million reviews on hotels, restaurants, tours, attractions, and even the weather.

Its branded websites reach 390 million average unique monthly visitors in 49 markets worldwide.

It also operates 23 other travel media brands including,,,,,,,, and others.

Fourth Miss in the Row in the Fourth Quarter

On Feb 15, TripAdvisor reported its fourth quarter results and missed for the fourth time in a row. Earnings were just $0.05 compared to the Zacks Consensus of $0.18.

Revenue rose 2% to $316 million from $309 million.

Expenses increased as it instituted its hotel instant booking and strengthened its reach in Attractions, Restaurants and Vacation Rentals.

The key for the company is raising awareness among consumers that TripAdvisor is more than just a review site. You can now book there as well.

2016 Always Meant to be a Transition Year

Investors were disappointed in TripAdvisor again this quarter, but 2016 was never meant to be anything more than a transition year as it rolled out the new, expensive initiatives.

It believes it has turned the corner in the fourth quarter and that 2017 will be stronger.

The analysts believe that as well.

Although they have cut 2017 estimates to $1.06 from $1.09 a share in the last 60 days, which is still earnings growth of 8%, they expect a bigger rebound in 2018.

2018 earnings are forecast to rise 22% to $1.30.

Shares Near 2-Week Low

Investors didn't like the quarter and punished the shares, which have sunk over the last 2 years.

Is this a buying opportunity?

Shares aren't cheap. They trade with a forward P/E of 44.

A lot is still riding on the new booking feature on the site, which hasn't been in place long enough to yield results.

If you're interested in the online travel area, you might want to consider online travel giant Priceline PCLN right now instead. It's expected to grow earnings by 15% next year. It's a Zacks Rank #3 (Hold) as it hasn't yet reported earnings.

[In full disclosure, the author of this article owns shares of both TRIP and PCLN.]

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