By: Craig Bowles
Expedia, Inc. (NASDAQ:EXPE) is slated to report 2Q 2014 earnings after the bell on Thursday, July 31st. The earnings release is expected at approximately 4:00 p.m. EST followed at 4:30 p.m. with a webcast presentation available through Expedia Investor Relations. This economically sensitive company is one of the top two global online travel agents and could therefore influence direction of the index futures and other broad market gauges.
Outliers & Strategy
- Adjusted Earnings Per Share: The current Street estimate is $0.76 (range $0.57 to $0.95) (Source: Yahoo! Finance). The broad range of analyst estimates reflects a lack of confidence in predicting Expedia's number.
- Revenues: Analysts expect an increase of 19.3% y/y to $1.44 bln (range $1.34 bln to $1.52 bln).
- Expedia shares trade at 34.1x trailing earnings, still above the 5-year average of 25.0x and industry's 27.4.
- Insiders sold 265,026 shares the last twelve months but only 379 shares the last three months.
- Expedia and Priceline (NASDAQ:PCLN) are the top two global online travel agents with similar gross-hotel bookings (US$30bn) and results could also impact other online travel agents, such as Travelzoo (NASDAQ:TZOO), TripAdvisor (NASDAQ:TRIP) and Orbitz Worldwide (NYSE:OWW).
- Expedia shares have a 1-day average price change on earnings of 9.12%. Options are pricing in an implied move of 9.65% off earnings.
- 07/22 Cantor Fitzgerald believes Expedia will post strong 2Q results, citing relative strength in U.S. paid search on Expedia.com in 2Q, along with healthy growth in Hotels.com visitation and improving European room rates, according to a post on finance.yahoo.com.
- 07/07 Expedia called certain rumors reported in Chinese media about the company's majority ownership of Chinese online travel service provider eLong Inc. inaccurate but does remain a long-term investor, according to a post on online.wsj.com.
- 07/06 Expedia agreed to buy Australia's Wotif for $658 million cash. Wotif sells hotel bookings and air travel through brands, including Wotif.com, lastminute.com.au and travel.com.au.
- 07/02 Expedia began accepting bitcoin for payments in June. Their EVP of global product Michael Gulmann declined to give detailed figures but reported that they have exceeded estimates, according to a post on Coindesk.com.
- 07/01 Oppenheimer initiated coverage on Expedia with an Outperform rating and $90.00 price target citing the company as being well-positioned to benefit from growth in the online travel agency sector, as the company can make acquisitions, form strategic alliances and increase its focus on mobile bookings, according to a post on Benzinga.com.
- 06/26 Expedia said it plans to buy Auto Escape Group, a European car rental booking company. Financial terms were not disclosed.
Expedia pushed above February's high to make a new all-time high in early July, but hasn't shown any follow through as shares have consolidated around $80. It appears investors are waiting on the earnings release for direction. A bullish report and new all-time highs are within $2. A bearish report has recent consolidative support at $70 where the 200-day moving average has risen to. (Chart courtesy of StockCharts.com)
As great a company as Expedia is, being the king of global travel booking has a severe downside when global chaos emerges as we found out in 2008. Expedia has beaten estimates the last three quarters and the stock responded favorably with a 6-8c beat, so probably needs to beat estimates by 6c with revenue of $1.46 bln to support the stock pushing into new all-time highs.
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