Founded in 2000, TripAdvisor, Inc. (TRIP) operates one of the world’s largest online travel platforms. It operates through three segments — Hotels, Media & Platform, Experiences & Dining, and Other. Its travel research platform aggregates reviews and opinions about accommodations, destinations, activities and attractions, and restaurants that enable consumers to plan and book hotels, vacation rentals, flights, activities and attractions, and restaurants. TRIP owns a portfolio of online travel brands.
As a result of the strict travel restrictions, and stay-at-home orders, the travel industry suffered significantly at the onset of the pandemic. However, the optimism surrounding the vaccines has been leading to fast recovery of the online travel platforms, as people have started making reservations for their long-due vacations. The stock has gained 99.2% since hitting its 52-week low of $13.73 on March 18. TRIP noted an uptick in consumer interest in trips more than 180 days out, indicating that consumers have already started thinking about and planning their 2021 holidays.
Even though the spread of the virus and its second strain is still a major concern, with its broad geographic reach and diverse offerings, the company should keep benefiting from the progress on vaccination. The company’s strategic positioning in the industry to grab the growing traffic on online platforms in the post-vaccine economy and the potential upside based on several factors have helped the stock earn a “Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates TRIP:
Trade Grade: A
TRIP is currently trading above its 50-day and 200-day moving averages of $27.50 and $22.29, respectively, indicating an uptrend. Moreover, TRIP has gained 46.9% over the past three months, reflecting a solid short-term bullishness.
The company’s top line increased 155.9% sequentially to $151 million for the third quarter ended September 30, 2020. Revenue from Tripadvisor-branded hotels contributed to 44.4% of the total revenue. The consumer interest for travel as measured by the monthly unique users on the company’s platform has notably improved since April’s low of 33%. The monthly unique users in July, August, and September were roughly 67%, 73%, and 74%, of last year’s comparable periods, respectively.
On December 8, TRIP unveiled a new trip designing platform called Reco, which helps travelers plan vacation experiences that are handcrafted by trusted experts who build tailor-made itineraries featuring the best of what a destination has to offer. The company announced the launch of two new technology solutions for hotels – Spotlight and Reputation Pro – on October 27.
TRIP launched Menu Connect on October 7, which is an online listings management solution that enables restaurants to easily publish, update, and manage their menu and business information across an expansive network of sites.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, TRIP is well-positioned. The stock is currently trading 9.1% below its 52-week high of $31.67.
The company has a track record of strong profitability and free cash flow generation. Over the past few years, TRIP has also aggressively expanded its geographic reach, enabling it to capture a large market share.
Peer Grade: C
TRIP is currently ranked #23 out of 61 stocks in the Internet industry. Other popular stocks in the internet group are Trivago N.V. (TRVG), Booking Holdings Inc. (BKNG), and Expedia Group, Inc. (EXPE).
TRIP declined 5.3% over the past year. While TRVG has lost 7.6% over the same period, BKNG and EXPE have gained 8.5% and 22.4%, respectively.
Industry Rank: A
The Internet industry is ranked #20 out of the 123 StockNews.com industries. The companies in this industry concentrate on numerous online business opportunities including content, auction exchanges, e-commerce sales, and advertising sales.
Increasing dependence on online platforms amid the pandemic helped the industry participants thrive. As the pace of digitalization is expected to continue even after the mass vaccination, the industry should keep witnessing steady demand.
Overall POWR Rating: B (Buy)
TRIP is rated “Buy” due to its short-and-long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.
TRIP has the potential to soar in the upcoming months despite gaining 65.5% over the past nine months as there is growing consumer interest for travel especially for shorter-duration, and outdoor-focused domestic getaways. Moreover, with restaurants gradually opening, the traffic to TRIP’s restaurant pages has been improving.
The consensus revenue estimate of $963.52 million for 2021 indicates a 60.4% increase year-over-year. Its EPS is expected to grow by 149% in 2021.
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TRIP shares were trading at $28.50 per share on Monday afternoon, down $0.28 (-0.97%). Year-to-date, TRIP has declined -0.97%, versus a -1.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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