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What's in the Offing for TripAdvisor's (TRIP) Q4 Earnings?

Zacks Equity Research

TripAdvisor, Inc. TRIP is set to report fourth-quarter 2018 results on Feb 13.

Notably, the company topped the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, recording average positive earnings surprise of 21.46%.

In the last reported quarter, TripAdvisor’s earnings of 72 cents per share delivered a positive surprise of 53.19%. The figure increased 75.6% sequentially and 100% from the year-ago quarter.

Revenues in the third quarter were $458 million, up 5.8% and 4.3% from the previous quarter and last-year quarter, respectively. However, the figure lagged the Zacks Consensus Estimate of $468 million.

The top-line growth can primarily be attributed to the company’s robust non-hotel segment and increasing average monthly unique visitors.

Coming to the price performance, shares of TripAdvisor have gained 57% over a year against the industry’s decline of 3.9%.

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 30 cents per share and the same for revenues is anticipated at $344.05 million.

Let’s see how things are shaping up prior to this quarter.

Factors to Drive Growth

The well-performing non-hotel business of TripAdvisor which includes revenues from attractions, restaurants and vacation rental businesses, has emerged as the key catalyst over the past few quarters. The trend is expected to continue with strong contributions in the to-be-reported quarter.

In the third quarter, the segment generated $153 million of revenues, reflecting year-over-year growth of 20%.

The segment is likely to drive the top line in the fourth quarter with the help of the ongoing shift from offline to online system in the market place.

Further, expanding footprint in the international restaurant reservation space will continue to aid revenue generation of this particular segment.

Additionally,the company’s focus on food delivery space is a major positive. In the fourth quarter, the company entered into a partnership with DoorDash to incorporate food-ordering service into its restaurant listings, consequently strengthening food-delivery service offerings.

Further, expansion of the company’s mobile product portfolio on a constant basis is likely to drive growth of its Mobile platform in the to-be-reported quarter.

Moreover, accelerating number of mobile hotel shoppers on TripAdvisor’s website bodes well for its growing mobile initiatives and is expected to aid the performance of its hotel segment.

Notably, all these factors are likely to benefit the company’s result in the to-be-reported quarter.

TripAdvisor, Inc. Price and EPS Surprise


TripAdvisor, Inc. Price and EPS Surprise | TripAdvisor, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, TripAdvisor sports a Zacks Rank #1 and has an Earnings ESP of +4.28%, which makes us reasonably confident about a positive earnings surprise.

Other Stocks That Warrant a Look

Here are few other stocks worth considering as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases.

Ameren Corporation AEE has an Earnings ESP of +6.92% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square SQ has an Earnings ESP of +6.06% and a Zacks Rank #2.

Ciena Corporation CIEN has an Earnings ESP of +1.70% and a Zacks Rank of 2.

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