Expedia’s EXPE shares have returned 33.8% year to date (YTD), outperforming the broader Zacks Retail-Wholesale sector’s 30.7% growth.

It has also outperformed the Zacks Internet - Commerce industry and its peers like Alibaba BABA, PSQ Holdings, Inc. PSQH and BigCommerce BIGC.

Over the same time frame, shares of BABA have returned 14%, while PSQH and BIGC have lost 62.4 % and 36.2%, respectively. The industry has grown 35.5% YTD. 

EXPE’s outperformance can be attributed to the continued growth in booked room nights and gross booking. For the third quarter of 2024, booked room nights grew 9% year over year to 97.4 million, while gross booking grew 7% year over year to $27.5 billion.

However, the sluggish growth in the Trivago segment, macroeconomic headwinds and geopolitical tensions are major concerns for EXPE. At the end of the third quarter, Trivago revenues declined 11.3% year over year to $102 million.

Will Expanding Clientele Aid EXPE’s Prospects?

Expedia recently announced a strategic partnership with Microsoft to combine Rapid API tech with the One Key travel reward program.

Expedia aims to leverage Rapid API to benefit Bing users from its entire booking experience providing access to more than 750K hotels and rentals globally.

EXPE’s partnership aims to offer Microsoft Bing users added rewards on bookings made through Expedia in 16 markets globally. Further, customers who book eligible accommodations through Bing not only earn Microsoft points but are also eligible to earn rewards from Expedia brands including One Key in the United States and United Kingdom. 

Expedia previously partnered with Wells Fargo and Mastercard to launch two co-branded credit cards to provide flexibility to travelers. 

EXPE also partnered with Cathay to integrate its White Label Template technology into the latter’s newly launched Cathay Holidays travel hub to boost and customize the travel booking and planning process for users.

Expedia Offers Revised Guidance

EXPE expects gross bookings to be in the 6- 8% range for fourth-quarter 2024, driven by a more favorable outlook for its air business. Revenue growth is expected to be roughly 1% lower than gross bookings growth.

It expects fourth-quarter EBITDA and EBIT to be relatively steady year over year.  

For 2024, EXPE expects gross bookings to be up 5% from 2023. Revenues are expected to increase 6% from the prior year. EBITDA and EBIT margins are now expected to be slightly up year over year.

Short-Term Earnings Estimates Steady

The Zacks Consensus Estimate for EXPE’s fourth-quarter 2024 earnings is pegged at $2.07 per share, which moved down 2.9% over the past 30 days. The estimate indicates 20.35% year-over-year growth.

The consensus mark for 2024 earnings is pegged at $11.59 per share, which moved down 1.3% in the past 30 days. The metric indicates 19.61% year-over-year growth.

Expedia’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 42.74%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The consensus estimate for EXPE’s fourth-quarter revenues is pegged at $3.07 billion, indicating 6.32% year-over-year growth.

The consensus mark for 2024 revenues is pegged at $13.59 billion, indicating 5.85% year-over-year growth.

EXPE Shares: Buy, Hold or Sell?

Expedia’s shares are undervalued as suggested by a Value Score of A.

In terms of the forward 12-month Price/Earnings (P/E) ratio, EXPE is trading at 13.21X, lower than the Zacks Retail-Wholesale sector’s 23.91X.

However, macroeconomic headwinds, geopolitical tensions and sluggish growth in the Trivago segment are concerns for investors.

EXPE currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.






 

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