Tripadvisor, an online travel company providing booking for hotel reservations, transportation, lodging, travel experiences, and restaurants, is scheduled to announce its fiscal fourth-quarter results on Thursday, February 15. We expect Tripadvisor’s stock to likely trade lower due to revenue and earnings missing consensus estimates. Tripadvisor has experienced a recovery in travel demand so far in FY 2023, but its revenue growth rate has moderated compared to 2022 levels. Moreover, the company’s rising costs have been impacting the company’s profitability as also seen in the first nine months of 2023. With Q4 being a low season for the company and uncertainty around its profitability, we believe that the company’s growth rates could likely dampen in the near term.
Tripadvisor’s Stock Performance
TRIP stock has suffered a sharp decline of 35% from levels of $30 in early January 2021 to around current levels, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. Notably, TRIP stock has underperformed the broader market in each of the last 3 years. Returns for the stock were -5% in 2021, -34% in 2022, and 20% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that Tripadvisor underperformed the S&P in 2021, 2022, and 2023. As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could TRIP face a similar situation as it did in 2021, 2022, and 2023 and underperform the S&P over the next 12 months – or will it see a recovery?
Revenue and Earnings Outlook
Our forecast indicates that Tripadvisor’s valuation is at $18 per share, which is 17% lower than the current market price. Tripadvisor’s Q4 2023 revenues are expected to be around $365 million, slightly below the consensus estimate. The company’s Q3 revenues rose 16% year-over-year (y-o-y) to $533 million. However, revenue at the TripAdvisor core brand increased just 2% to $290 million. Viator, on the other hand, saw top-line growth of 41% y-o-y to $245 million. Management also talked up its new generative artificial intelligence (AI) planning tool, which is now in beta, taking advantage of the latest technology. For the full year 2023, we expect Tripadvisor revenues to rise 16% y-o-y to $1.7 billion.
Tripadvisor’s Q4 2023 earnings per share (EPS) is expected to come in at 18 cents as per our analysis, missing the consensus estimate. Despite a higher revenue base, the business wasn’t able to profit from it. The company’s bottom line was in the red in the first nine months of 2023 at -$0.16 compared to $0.15 during the same period in 2022. The company spent aggressively on marketing and technology development, especially in the Viator and core Tripadvisor platforms. However, the company’s earnings per share were up 12% y-o-y to $0.19 in Q3 2023.
Stock Price Analysis
Going by our Tripadvisor’s Valuation, with an EPS estimate of around $1.04 and a P/E multiple of around 17.8x in fiscal 2023, this translates into a price of $18, which is almost 17% lower than the current market price. It is helpful to see how its peers stack up. TRIP Peers shows how Tripadvisor’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
Market Performance
| Returns | Feb 2024 MTD [1] |
Since start of 2023 [1] |
2017-24 Total [2] |
| TRIP Return | 1% | 21% | -53% |
| S&P 500 Return | 4% | 31% | 125% |
| Trefis Reinforced Value Portfolio | 3% | 42% | 628% |
[1] Returns as of 2/11/2024
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
