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Bull of the Day: Air BnB (ABNB)

There is no question that inflation has hit the US. We have seen price increases in everything from used cars to food prices to real estate. It has created entirely new industries, taking advantages of opportunities previously unavailable. One area is certainly in real estate. There are a few companies taking the sharing economy to the next level, and creating investment opportunities that have never existed. Today’s Bull of the Day is one of these companies.

I am talking about Zacks Rank #1 (Strong Buy) Airbnb (ABNB). Airbnb, Inc., together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide. The company's marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences. It primarily offers private rooms, primary homes, or vacation homes. 

The growth on both the top and bottom line has been impressive. Current year revenue growth is set at 39%, while next year is slated to grow at 15%. That translates to EPS Growth of 494% for this year and 23% for next year.

Analysts have been bullish as well. Analysts have increased their estimates for both the current year and next year. Over the last 90 days, current year estimates are up from $1.89 to $2.25 while next year’s number is up from $2.61 to $2.77.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Part of the reason is likely the recent surprises for the stock. Last quarter’s EPS surprise was 15 cents or 36% better than expected. Looking back at the last four reports of the year, the company has beat by an average of 20 cents or 57% each and every quarter. The company has beat expectations for five consecutive quarters.

Also, a quick look at the Price, Consensus and EPS Surprise Chart shows how earnings expectations have been ticking up each quarter. This is a clear cut case of a stock that has been under-promising and over-delivering quarter in and quarter out. Expectations continue to rise as the stock has actually been under pressure.


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