Best Stocks for 2017: TripAdvisor Inc (TRIP) Still a Strong Platform
Editor’s note: This column is part of our Best Stocks for 2017 contest. Jason Moser’s pick for the contest is TripAdvisor Inc (NASDAQ:TRIP).
Second-quarter results for TripAdvisor Inc (NASDAQ:TRIP) (announced in August) were encouraging, but it’s clear that management is still working to gain back the market’s trust so that they can bring the business back to the growth rates of the past.
Source: JD Lasica/Cruiseable.com via Flickr
Top-line revenue grew 10% excluding currency effects and earnings were flat as the company continues to recover investments made in instant booking over the past year.
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The Metrics That Really Matter in TRIP Stock
While the near-term picture for TripAdvisor is still cloudy, the platform itself remains highly engaged as the chart below shows:
Source: Company earnings releases
In addition, another key metric, hotel shoppers growth, is back on the rise. Hotel shopper growth will be key to getting revenue per hotel shopper growth back on track and all things considered the trends are headed back in the right direction slowly but surely:
Source: Company earnings releases
Source: Company earnings releases
Beyond Hotels
One of the bigger market opportunities on the horizon that management remains optimistic about is the non-hotel segment. This includes things like attractions, tours and activities and restaurants.
Revenue in this segment grew 35% excluding currency effects as the platform adds more inventory for travelers to plan and book their perfect trip.
The Bottom Line for TripAdvisor
TripAdvisor remains a healthy business with an attractive, cash-flow-rich business model. This has enabled management to continue to buy back shares at a rapid clip at a level they clearly believe represents a compelling value. They repurchased 2.55 million shares for the quarter and have already completed their $250 million authorization.
The balance sheet remains flush with just under $1 billion in cash and equivalents, so I expect them to continue buying back shares opportunistically.
It has been a tough 2017 so far for the stock, and if this were a platform in decline I would be concerned. However the numbers tell a story of a platform on the rise, one that is becoming more engaging not less. Management’s expectations for instant booking were clearly off the mark but that doesn’t mean it’s game set and match for the business.
Indeed I expect to see brighter days ahead for TripAdvisor shares so I’ll remain a happy (and patient) owner.
As of this writing, Jason Moser owned shares of TRIP.
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