WF vs. BEN: Which Stock Should Value Investors Buy Now?
It has been about a month since the last earnings report for TripAdvisor, Inc. TRIP. Shares have added about 3.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is TRIP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
TripAdvisor Q4 Earnings Miss Estimates, Revenues Beat
TripAdvisor Inc. reported adjusted fourth-quarter 2017 earnings of 6 cents per share, missing the Zacks Consensus Estimate by 9 cents.
Also, earnings decreased 63% from the year-ago quarter and 84% sequentially. However, revenues of $321 million were above the Zacks Consensus Estimate of $311 million.
TripAdvisor’s quarterly revenues reflect a decrease of 26.9% sequentially but an increase of 1.6% year over year.
TripAdvisor reports revenues under two segments: Hotel and Other.
Revenues of $244 million from the Hotel segment decreased 3% from the year-ago quarter but made up 76% of the total revenues. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise, including that from the company’s largest subsidiary, SmarterTravel, as well as from operations in China.
Revenues of $77 million from the Non-Hotel segment increased 20% year over year and contributed to the remaining 24% of the total revenues. This segment includes revenues from attractions, restaurants and vacation rental businesses.
Revenues by Source
Revenues of $137 million from Click-based advertising decreased 11% from the year-ago quarter and accounted for 43% of the total revenues. Revenues from Display-based advertising increased 12% year over year to $77 million and brought home 24% of the total revenues. The other hotel revenue component was $30 million, up 3% from the year-ago quarter. However, it accounted for 10% of the total revenues. Non-Hotel revenue component contributed to the remaining 24%, accounting for $77 million in revenues, up 20% year over year.
TripAdvisor’s adjusted operating expenses of $267 million increased 2% year over year. The adjusted operating margin of 2.8% was down 40 bps from the year ago-quarter.
On a GAAP basis, TripAdvisor’s net loss was $84 million or 60 cents per share, compared to net profit of $1 million or earnings of 1 cent per share.
Balance Sheet & Cash Flow
TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $708 million, down from $763 million in the prior quarter. Accounts receivables were $230 million, decreasing from $254 million in the last quarter.
Long-term debt was $230 million in the fourth quarter compared with $265 million in the previous quarter.
Cash flow from operations was $18 million, increasing from ($135) million in the previous quarter. Capex was $15 million, flat from the prior quarter. Free cash flow was $3 million, increasing from ($150) million in the previous quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to one lower.
TripAdvisor, Inc. Price and Consensus
TripAdvisor, Inc. Price and Consensus | TripAdvisor, Inc. Quote
At this time, TRIP has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, TRIP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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