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Expedia (EXPE) Q4 Earnings: What's in the Cards this Time?
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Expedia, Inc. (EXPE - Free Report) is set to report fourth-quarter 2016 results on Feb 9 after the bell.
Over the last one year, the stock has underperformed the Zacks Electronic Commerce industry. It has gained 33.34% compared with the industry’s gain of 57.95%.
The company has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. We don’t recommend Sell-rated stocks (Zacks Rank #4 or #5) going into the earnings announcement.
Moreover, Expedia’s surprise history hasn’t been impressive, since the company has missed estimates in two of the last four quarters with an average negative surprise of 0.18%.
What Happened in the Third Quarter?
Revenues were up 17.5% sequentially and 33.2% year over year to $2.58 billion. Gross bookings decreased 1.5% sequentially but increased 20.7% year over year to $18.58 billion. The revenue margin was 13.9%, up 220 bps sequentially and 130 bps above the year-ago level.
The company completed the integration of a number of companies into its core platforms. Expedia increased spending on Facebook advertising, which continued to grow significantly.
The company owned hotel search platform Trivago raised $287 million in an initial public offering (IPO).
Fourth Quarter Expectations
Booked-to-room night ratio is expected to remain healthy in the fourth quarter. The company is likely to have increased its spending in this respect.
Regional brands are currently focused on maintaining operating efficiency through lower marketing spending, which is expected to drive profitability.
Expedia expects the Egencia segment to be driven by continued market share gain under the managed corporate travel market. The division remains focused on doubling its gross bookings by 2020 through organic means as well as strategic acquisitions.
Increased spending on high-cost performance marketing channels such as metasearch and search engine marketing could weigh on margins in the fourth quarter.
The company anticipates revenue per ticket growth to return to a more normalized level in the fourth quarter. Investments in selling & marketing and in product & technology on HomeAway segment are likely to increase.
The additional spending along with the phasing out of tiered subscription fees could result in slower adjusted EBITDA growth for HomeAway beginning the fourth quarter. The company plans to roll out consumer fee next year, which will further impact HomeAway’s profitability.
Nevertheless, Expedia believes that the aggressive level of investment will help the division to achieve its target of $350 million of adjusted EBITDA at HomeAway in 2018.
Technology & content expense is likely to decline to the high 20% to low 30% range in the fourth quarter.
Stocks to Consider
Here are some companies that, as per our model, that have the right combination of elements to post an earnings beat this quarter:
Carbonite, Inc. with an Earnings ESP of +100.00% and a Zacks Rank #1.
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Expedia (EXPE) Q4 Earnings: What's in the Cards this Time?
Expedia, Inc. (EXPE - Free Report) is set to report fourth-quarter 2016 results on Feb 9 after the bell.
Over the last one year, the stock has underperformed the Zacks Electronic Commerce industry. It has gained 33.34% compared with the industry’s gain of 57.95%.
The company has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Expedia, Inc. Price and EPS Surprise
Expedia, Inc. Price and EPS Surprise | Expedia, Inc. Quote
Per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. We don’t recommend Sell-rated stocks (Zacks Rank #4 or #5) going into the earnings announcement.
Moreover, Expedia’s surprise history hasn’t been impressive, since the company has missed estimates in two of the last four quarters with an average negative surprise of 0.18%.
What Happened in the Third Quarter?
Revenues were up 17.5% sequentially and 33.2% year over year to $2.58 billion. Gross bookings decreased 1.5% sequentially but increased 20.7% year over year to $18.58 billion. The revenue margin was 13.9%, up 220 bps sequentially and 130 bps above the year-ago level.
The company completed the integration of a number of companies into its core platforms. Expedia increased spending on Facebook advertising, which continued to grow significantly.
The company owned hotel search platform Trivago raised $287 million in an initial public offering (IPO).
Fourth Quarter Expectations
Booked-to-room night ratio is expected to remain healthy in the fourth quarter. The company is likely to have increased its spending in this respect.
Regional brands are currently focused on maintaining operating efficiency through lower marketing spending, which is expected to drive profitability.
Expedia expects the Egencia segment to be driven by continued market share gain under the managed corporate travel market. The division remains focused on doubling its gross bookings by 2020 through organic means as well as strategic acquisitions.
Increased spending on high-cost performance marketing channels such as metasearch and search engine marketing could weigh on margins in the fourth quarter.
The company anticipates revenue per ticket growth to return to a more normalized level in the fourth quarter. Investments in selling & marketing and in product & technology on HomeAway segment are likely to increase.
The additional spending along with the phasing out of tiered subscription fees could result in slower adjusted EBITDA growth for HomeAway beginning the fourth quarter. The company plans to roll out consumer fee next year, which will further impact HomeAway’s profitability.
Nevertheless, Expedia believes that the aggressive level of investment will help the division to achieve its target of $350 million of adjusted EBITDA at HomeAway in 2018.
Technology & content expense is likely to decline to the high 20% to low 30% range in the fourth quarter.
Stocks to Consider
Here are some companies that, as per our model, that have the right combination of elements to post an earnings beat this quarter:
Applied Optoelectronics Inc. (AAOI - Free Report) with an Earnings ESP of +15.87% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carbonite, Inc. with an Earnings ESP of +100.00% and a Zacks Rank #1.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>