A month has gone by since the last earnings report for TripAdvisor (TRIP - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TripAdvisor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
TripAdvisor Lags Q4 Earnings Estimates, Tops Revenues
TripAdvisor Inc. reported adjusted fourth-quarter 2018 earnings of 27 cents per share, missing the Zacks Consensus Estimate by 3cents.The reported earnings decreased 62.5% sequentially but increased 350% from the year-ago quarter.
Revenues in the fourth quarter were $346 million, surpassing the Zacks Consensus Estimate by 0.49%. The top line was up 7% year over year but down 24% sequentially.
During the quarter, the company recorded a year-over-year increase in average monthly unique visitors and revenue per hotel shopper. However, average monthly unique hotel shoppers decreased from the year-ago quarter.
Notably, the stock has gained 39.8% against its industry’s decline of 6% over the past year.
TripAdvisor reports revenues under two segments: Hotel and Other.
Revenues of $240 million (accounting for 69% of its total revenues) from the Hotel segment decreased 2% from the year-ago quarter. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise. It also comprises sales from the company’s largest subsidiary, SmarterTravel, as well as operations in China.
Revenues of $106 million from the Non-Hotel segment increased 38% year over year and contributed the remaining 31% of its total revenues. This segment includes revenues from attractions, restaurants and vacation rental businesses.
Revenues by Source
Revenues of $139 million (accounting for 40% of the total revenues) from Click-based and transaction increased 1% from the year-ago quarter. Revenues from Display-based advertising remained flat year over year at $77 million and brought home 22% of the total revenues. The other hotel revenue component contributed $24 million, which was down 20% from the year-ago quarter.
Average monthly unique visitors grew 2% from the prior-year quarter to approximately 490 million.
Average monthly unique hotel shoppers decreased 11% year over year.
TripAdvisor’s adjusted operating expenses of $273 million were up 2.2% from $267 million a year ago. Per the press release, operating margin of 6.6% was up 380 basis points from the year ago-quarter.
On a GAAP basis, the company’s net income was $7 million or 5 cents per share versus net loss of $84 million or 60 cents in the prior-year quarter.
Balance Sheet & Cash Flow
TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $670 million, up from $663 million recorded in the last reported quarter. Accounts receivables were $212 million, down from $237million in the third quarter.
Cash flow from operations was $31 million, increasing from $14 million in the last reported quarter. Capex was $16 million, up from $15 million in the third quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.5% due to these changes.
Currently, TripAdvisor has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TripAdvisor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.