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Will Higher Expenses Hit TripAdvisor's (TRIP) Q4 Earnings?

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TripAdvisor Inc. (TRIP - Free Report) is slated to report fourth-quarter 2017 results on Feb 15. Last quarter, the company delivered a positive earnings surprise of 5.9%.

TripAdvisor does not have a decent surprise history. The company missed estimates in two of the trailing four quarters, with an average negative surprise of 7.1%.

The company's shares have lost 26.6% in the past 12 months, underperforming the industry’s gain of 50.7%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

In the last reported third quarter, TripAdvisor’s average monthly unique visitors on the company’s branded websites and applications reached nearly 455 million, increasing 17% year over year. The number is expected to expand in the upcoming quarter driven by its rich content. The Zacks Consensus Estimate for the upcoming quarter is pegged at $347 million.

TripAdvisor’s Hotel segment revenues of $312 million decreased 4% sequentially and 3% from the year-ago quarter. Also, click-based advertising revenues decreased 5% from the year-ago quarter and accounted for 44% of total revenues.

Lately, the company has been making efforts for travelers to book hotels directly on its website instead of just using it as a review site. These efforts will continue to boost the company’s clicked-based advertising and transaction revenues, expanding its top-line growth in the upcoming quarter.

TripAdvisor’s Non-Hotel segment revenues of $127 million increased 30% sequentially and 26% from the year-ago quarter. The growth will continue to accelerate, driven primarily by continued strong traction of attractions and restaurant businesses.

However, mounting expenses due to new initiatives and investments are hurting the company’s profits. Also, management has been spending huge amounts on acquisitions. Though these continued investments could boost the top line, it can have a negative impact on the company’s near-term profitability.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

However, TripAdvisor has a Zacks Rank #3 and an Earnings ESP of -9.40%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TripAdvisor, Inc. Price and EPS Surprise


TripAdvisor, Inc. Price and EPS Surprise | TripAdvisor, Inc. Quote

Other Stocks to Consider

We see a likely earnings beat for each of the following companies.

Century Communities, Inc. (CCS - Free Report) , with an Earnings ESP of +7.32% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corp. (NVDA - Free Report) , with an Earnings ESP of +6.84% and a Zacks Rank #2.

Advanced Micro Devices, Inc. (AMD - Free Report) , with an Earnings ESP of +8.72% and a Zacks Rank #3.

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