Better Buy: MakeMyTrip vs. Trivago

NASDAQ: MMYT | MakeMyTrip Limited - Ordinary Shares News, Ratings, and Charts

MMYT – The roll-out of COVID-19 vaccines is raising hopes for a solid rebound of the travel industry this year. The industry has been in the doldrums since last year. But, as the number of people traveling is now on the rise, analysts are hopeful that people will transition from searching for trips online to actually booking them. The two leaders in this space — MakeMyTrip (MMYT) and Trivago (TRVG) — are well positioned to ride an industry rebound. But let’s take a closer look at why MMYT is a better buy now.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

MakeMyTrip Limited (MMYT) and Trivago N.V. (TRVG) are two leading online travel companies that provide hotel, lodging and accommodation search and booking facilities. MMYT sells travel products and solutions in India, the U.S., Singapore, Malaysia, through three segments — Air Ticketing, Hotels and Packages, and Bus Ticketing. TRVG provides online meta-search for hotels and accommodation through online travel agencies, hotel chains, and independent hotels.

The travel industry is expected to witness an increase in volume as travel activities resume gradually with the anticipated easing of lockdown restrictions this year. Also, as vaccines take effect, leading travel stocks like MMYT and TRVG are poised to service a torrent of pent-up vacation demand as people emerge from months of being cooped up at home.

While MMYT has returned 22.6% over the past year, TRVG has declined 15.9%. In terms of past six-month performance, MMYT is the clear winner with 74.9% gains versus TRVG’s 17% returns. Here is why we think MMYT is a better pick now:

Recent Financial Results

In the fiscal second quarter ended September 30, 2020, MMYT’s revenue surged 229.7% sequentially to $21.1 million, due primarily to some domestic travel and government approved international travel operations that commenced in late May. The company’s adjusted margin under the air ticketing segment was 8.0% compared to 7.2% in the quarter ended September 30, 2019, due to incremental incentives from suppliers. MMYT’s other-segment’s income increased 100% from the prior-year quarter to $0.40 million.

TRVG’s revenue for the third quarter ended September 30, 2020 declined 76% year-over-year to €60.60 million. The company’s consolidated return on advertising sales  was 190.3%, compared to 122.8% in the same period in 2019. The increase was mainly driven by significant reductions in brand marketing activities and higher ROAS targets in TRVG’s performance marketing channels in reaction to the COVID-19 pandemic

Past and Expected Financial Performance

Analysts expect MMYT’s revenue to increase 181.7% next year. The company’s EPS is expected to grow 17.1% next year. Moreover, its EPS is expected to grow at a rate of 48.6% per annum over the next five years.

Analysts expect TRVG’s revenue to increase 60.6% in the current year. The company’s EPS is expected to grow 98.8% in the current year. Moreover, TRVG’s EPS is expected to grow at a rate of 33.4% per annum over the next five years.

Profitability      

TRVG’s trailing-12-month revenue is 1.56 times MMYT’s.  Also, TRVG is more profitable with a gross profit margin of 97.1% versus MMYT’s 29.3%.

Moreover, TRVG’s leveraged free cash flow margin of 7.6% compares favorably with MMYT’s 5.5%.

Valuation

In terms of trailing-12-month Price/Sales, MMYT is currently trading at 10.67x, which is much more expensive than TRVG, which is currently trading at 1.84x. Moreover, MMYT’s trailing-12-month Price to Book of 3.59x is 252% higher than TRVG’s 1.02x.

Though MMYT looks much more expensive compared to TRVG, we think this premium valuation is justified considering MMYT’s superior financials.

POWR Ratings

MMYT is rated “Strong Buy” in our proprietary POWR Ratings system, while TRVG is rated “Neutral”.  Here are how the four components of overall POWR Rating are graded for MMYT and TRVG:

MMYT has an “A” for Trade Grade, Peer Grade, Buy & Hold Grade, and Industry Rank. In the 67-stock Internet industry, it is ranked #14.

TRVG has a “C” for Trade Grade and Buy & Hold Grade, a “D” for Peer Grade, and an “A” for Industry Rank. It is ranked #32 of 67 stocks in the same industry.

The Winner

Both MMYT and TRVG are expected to do well in the long run because of the industry’s anticipated revival  and strategic changes in their offerings. However, MMYT appears to be a better buy despite trading at a higher valuation based on its better financials.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

The #1 CRITICAL Investment Lesson from 2020

7 Best ETFs for the NEXT Bull Market


MMYT shares were trading at $29.00 per share on Wednesday afternoon, up $0.13 (+0.45%). Year-to-date, MMYT has declined -1.79%, versus a 0.40% rise in the benchmark S&P 500 index during the same period.


About the Author: Imon Ghosh


Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MMYTGet RatingGet RatingGet Rating
TRVGGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!


Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Is General Motors the Next Tesla?

GM is not only a value play...it is potentially an explosive growth stock given a massive investment in electric vehicles. Time to get on board General Motors shares before its too late. Read on for more...

:  |  News, Ratings, and Charts

How to Outperform the Stock Market in 2021

The S&P 500 (SPY) is up over 70% from the ferocious bear market low set in March of 2020. Let me be emphatically clear…IT WONT BE THAT EASY IN 2021! So let’s discuss the 2021 stock market outlook including a game plan to outperform in the year ahead and my top 12 picks for today’s market. Read on for more…

:  |  News, Ratings, and Charts

2 Chinese Stocks Rated Strong Buy: EHang and Daqo

China’s fast recovery from the pandemic has given it an edge over the rest of the world. A strong recovery in China’s household spending is driving its growth. And because the country is now engaged in various diplomatic moves and trade deals to boost its economic growth, we believe stocks like Daqo New Energy (DQ) and EHang (EH) have enormous growth potential. Here are some details.

:  |  News, Ratings, and Charts

3 Lesser-Known Cloud Stocks to Add to Your Portfolio

There is a growing shift to cloud computing in today’s technology landscape. This has helped the key cloud service providers grow exponentially over the years. In-part because the COVID-19 pandemic accelerated the pace of transition last year, most well-known stocks in the cloud space are currently trading at sky-high valuations. So, investing in lesser-known cloud service providers, such as Paylocity (PCTY), Inovalon Holdings (INOV), and Pluralsight (PS), could be highly rewarding now. Let’s evaluate.

:  |  News, Ratings, and Charts

2 Chinese Stocks Rated Strong Buy: EHang and Daqo

China’s fast recovery from the pandemic has given it an edge over the rest of the world. A strong recovery in China’s household spending is driving its growth. And because the country is now engaged in various diplomatic moves and trade deals to boost its economic growth, we believe stocks like Daqo New Energy (DQ) and EHang (EH) have enormous growth potential. Here are some details.

Read More Stories

More MakeMyTrip Limited - Ordinary Shares (MMYT) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MMYT News