Here's What The Buy Side Expects TripAdvisor To Report Tuesday

Feb.11.14 | About: TripAdvisor Inc. (TRIP)

TripAdvisor Inc. (NASDAQ:TRIP) is set to report FQ4 2013 earnings after the market closes on Tuesday, February 11th. TripAdvisor is a website that provides travel related information and content. Within the past year, TripAdvisor has switched to a hotel metasearch model. This means that TRIP now sends its users' searches to several other search engines and/or databases to return the best possible results. This shift could increase costs hurting TripAdvisor on the bottom line; however, most analysts are expecting TRIP to beat the Street's projection on revenue. Here's how investors expect TRIP to report Tuesday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for TripAdvisor)

The current Wall Street consensus expectation is for TRIP to report 20c EPS and $204.96M revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is 22c EPS and $207.25M revenue. This quarter the buy-side as represented by the Estimize.com community is expecting TRIP to beat the Wall Street consensus on both EPS and revenue.

Throughout the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting TRIP's profit and revenue 4 and 3 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential compared to previous quarters.

This quarter analysts are expecting year-over-year profit to decline but for revenue to be up compared to FQ4 last year. The distribution of estimates published by analysts on the Estimize.com platform range from 18c to 28c EPS and $195.00M to $217.90M in revenues. This quarter, we're seeing a moderate distribution of estimates on TRIP compared to recent quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.

Throughout the quarter, the EPS estimate from Wall Street decreased from 25c to 20c while the Estimize consensus started and ended the period at 23c. Over the same time period, Wall Street lowered its revenue expectation from $211.8M to $204.96M while the Estimize forecast pushed higher from $205.63M to $207.25M. Timeliness is correlated with accuracy and increasing analyst revisions going into a report are often a bullish indicator.

The analyst with the highest estimate confidence rating this quarter is brianprovost who projects 22c EPS and $206.00M in revenue. In the Winter 2014 season, brianprovost rated as the 287th best analyst and is ranked 1084th overall among over 3,800 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, brianprovost is expecting TripAdvisor beat the Estimize.com consensus on both profit and revenue but is expecting TRIP to report less revenue than the Estimize consensus is calling for.

This quarter, contributing analysts on the Estimize.com platform have high expectations for TRIP. Despite the shift within the past year to a hotel metasearch model, analysts are still projecting TripAdvisor to beat Wall Street expectations on both the top and bottom line.

Disclosure: No positions.