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Bear of the Day: TripAdvisor (TRIP)

Madeleine Johnson

Based in Massachusetts, TripAdvisor Inc. (TRIP) is one of the biggest online travel research companies, providing a platform for users to share reviews, ratings, and opinions on hotels, destinations, attractions, and restaurants. The company also helps with bookings between hotels and customers.

Q3 Earnings Disappoint

Back in November, TripAdvisor reported third quarter results that disappointed analysts and investors.

Total revenue came in at $428 million, falling 7% year-over-year and missing the Zacks Consensus Estimate of $456 million. The company’s Hotel, Media, and Platform segment revenue decreased 12%.

Even though operating expenses also decreased in Q3, it couldn’t offset TRIP’s worsening revenue patterns, and adjusted EPS fell to 58 cents a share.

One bright spot, however, was Experiences and Dinning, where revenue rose 19%.

TRIP is now a Zacks Rank #5 (Strong Sell).

Company management called the results “frustrating…particularly considering we entered 2019 with such great momentum” in the quarterly conference call.

Shares of the travel company are down about 37% in the last six months, and slumped almost 20% the day of its earnings release. The S&P 500, on the other hand, was on a tear last year, soaring more than 30%.

Bottom Line

For fiscal 2019, seven analysts cut their earnings outlook, and the consensus estimate has fallen nine cents from $1.84 to $1.75 per share. Seven analysts also slashed their estimate for next fiscal year, but earnings could see nearly 10% growth.

Competition from Google (GOOGL) is definitely hurting TRIP’s business right now, but it’s not the only travel company being negatively affected. Expedia (EXPE) and Trivago (TRVG) are also losing users and revenue to the search giant. TripAdvisor’s latest results only showcase one of the many issues facing businesses like theirs.

Investors who are interested in adding an online travel peer to their portfolio could consider Booking Holdings (BKNG). BKNG is a #3 (Hold) on the Zacks Rank, and shares have gained 19% in the last year.

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