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Forget Expedia, Invest in These 4 Internet Stocks Instead
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It seems that Expedia Inc. (EXPE - Free Report) is in troubled waters. In the last reported fourth quarter, the company failed to report impressive earnings. Moreover, the stock carries a Zacks Rank #5 (Strong Sell).
What Happened in the Fourth Quarter?
This online travel booking company reported fourth-quarter earnings of 84 cents per share, which missed the Zacks Consensus Estimate by 32 cents. The disappointing performance was due to the company’s increased expenditure, including investments to fund acquisitions.
Expedia embarked on a series of acquisitions to strengthen its position in the domestic market and expand internationally. This has brought on board a variety of different businesses that have to be integrated into its core. This integration issue remains a major headwind for the company. Moreover, these businesses also require separate marketing and promotion , which could be one reason why the associated costs are rising exponentially.
The company’s quarterly revenues of $2.32 billion fell 21.8% sequentially and missed the Zacks Consensus Estimate of $2.37 billion. However, revenues were up 10.8% year over year. Gross bookings decreased 11% sequentially.
For the first quarter, Expedia expects adjusted EBITDA to decline significantly on a year-over-year basis. Both HomeAway and trivago are projected to report adjusted loss. Also, profitability is expected to be negatively impacted by continuing investments in accelerated supply acquisition, cloud migration as well as incremental spending on selling & marketing.
In terms of technology & content expense, Expedia expects spending to grow significantly faster than revenues in the upcoming quarter, primarily due to an increase in cloud and the impact of key investments.
Downward Estimate Revisions
Expedia’s earnings picture doesn’t look good at all right now. In the last 30 days, five out of nine analysts have revised their earnings estimates downward for the current quarter. The consensus estimate for this quarter has also declined considerably over the last 30 days, going down from loss of 27 cents to loss of 40 cents per share.
Also, Expedia has a weak earnings history. It missed the Zacks Consensus Estimate in each of the trailing four quarters, with an average negative surprise of 15.63%.
Turnaround Efforts
To counter current market conditions, management is refocusing on operational formula, expansion of supply portfolio, optimization of marketing channels globally and growth of repeat users.
While these measures seem impressive at first glance, it could be a while before they start paying off. So for now, it is advisable to steer clear of Expedia.
4 Internet Stocks That are Much Better Off
Though Expedia's prospects may not appear impressive at the moment, there are some Internet stocks in the technology sector that hold promise.
Zacks’ proprietary methodology comes in handy while zeroing in on these stocks. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four stocks that fit the bill.
Redwood City, CA-based Shutterfly Inc. is a leading provider of Internet-based social expression and personal publishing service. Through its broad range of leveraged technology, manufacturing, web-design and merchandising capabilities, customers can share, print and preserve their digital photographs.
Shutterfly carries a Zacks Rank #1 and has a VGM Score of A. In the past year, shares of this company have returned 81.9% compared with the industry’s gain of 61.5%. The company has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 12.99%.
QuinStreet Inc. (QNST - Free Report) is a provider of online direct marketing and media services. The company offers online messaging, email broadcasting, search engine marketing and brand management services.
It carries a Zacks Rank #2 and has a VGM Score of B. In the past year, shares of this company have increased 288.7% compared with the industry’s gain of 58.3%. Moreover, its long-term EPS growth rate is 25%.
Vipshop Holdings Limited (VIPS - Free Report) is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website.
This company has a Zacks Rank #2 and a VGM Score of B. However, in the last year, the stock has returned 27.3% compared with the industry’s gain of 58.3%.
RELX PLC (RELX - Free Report) is engaged in providing information and analytics solutions on a global basis.
This company has a Zacks Rank #2 and a VGM Score of A. In the past year, shares of this company have increased 9.1% compared with the industry’s gain of 61.5%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Forget Expedia, Invest in These 4 Internet Stocks Instead
It seems that Expedia Inc. (EXPE - Free Report) is in troubled waters. In the last reported fourth quarter, the company failed to report impressive earnings. Moreover, the stock carries a Zacks Rank #5 (Strong Sell).
What Happened in the Fourth Quarter?
This online travel booking company reported fourth-quarter earnings of 84 cents per share, which missed the Zacks Consensus Estimate by 32 cents. The disappointing performance was due to the company’s increased expenditure, including investments to fund acquisitions.
Expedia embarked on a series of acquisitions to strengthen its position in the domestic market and expand internationally. This has brought on board a variety of different businesses that have to be integrated into its core. This integration issue remains a major headwind for the company. Moreover, these businesses also require separate marketing and promotion , which could be one reason why the associated costs are rising exponentially.
The company’s quarterly revenues of $2.32 billion fell 21.8% sequentially and missed the Zacks Consensus Estimate of $2.37 billion. However, revenues were up 10.8% year over year. Gross bookings decreased 11% sequentially.
Expedia, Inc. Price and Consensus
Expedia, Inc. Price and Consensus | Expedia, Inc. Quote
Weak Outlook for the Upcoming Quarter
For the first quarter, Expedia expects adjusted EBITDA to decline significantly on a year-over-year basis. Both HomeAway and trivago are projected to report adjusted loss. Also, profitability is expected to be negatively impacted by continuing investments in accelerated supply acquisition, cloud migration as well as incremental spending on selling & marketing.
In terms of technology & content expense, Expedia expects spending to grow significantly faster than revenues in the upcoming quarter, primarily due to an increase in cloud and the impact of key investments.
Downward Estimate Revisions
Expedia’s earnings picture doesn’t look good at all right now. In the last 30 days, five out of nine analysts have revised their earnings estimates downward for the current quarter. The consensus estimate for this quarter has also declined considerably over the last 30 days, going down from loss of 27 cents to loss of 40 cents per share.
Also, Expedia has a weak earnings history. It missed the Zacks Consensus Estimate in each of the trailing four quarters, with an average negative surprise of 15.63%.
Turnaround Efforts
To counter current market conditions, management is refocusing on operational formula, expansion of supply portfolio, optimization of marketing channels globally and growth of repeat users.
While these measures seem impressive at first glance, it could be a while before they start paying off. So for now, it is advisable to steer clear of Expedia.
4 Internet Stocks That are Much Better Off
Though Expedia's prospects may not appear impressive at the moment, there are some Internet stocks in the technology sector that hold promise.
Zacks’ proprietary methodology comes in handy while zeroing in on these stocks. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four stocks that fit the bill.
Redwood City, CA-based Shutterfly Inc. is a leading provider of Internet-based social expression and personal publishing service. Through its broad range of leveraged technology, manufacturing, web-design and merchandising capabilities, customers can share, print and preserve their digital photographs.
Shutterfly carries a Zacks Rank #1 and has a VGM Score of A. In the past year, shares of this company have returned 81.9% compared with the industry’s gain of 61.5%. The company has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 12.99%.
QuinStreet Inc. (QNST - Free Report) is a provider of online direct marketing and media services. The company offers online messaging, email broadcasting, search engine marketing and brand management services.
It carries a Zacks Rank #2 and has a VGM Score of B. In the past year, shares of this company have increased 288.7% compared with the industry’s gain of 58.3%. Moreover, its long-term EPS growth rate is 25%.
Vipshop Holdings Limited (VIPS - Free Report) is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website.
This company has a Zacks Rank #2 and a VGM Score of B. However, in the last year, the stock has returned 27.3% compared with the industry’s gain of 58.3%.
RELX PLC (RELX - Free Report) is engaged in providing information and analytics solutions on a global basis.
This company has a Zacks Rank #2 and a VGM Score of A. In the past year, shares of this company have increased 9.1% compared with the industry’s gain of 61.5%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>