TripAdvisor Inc. (TRIP) is slated to report fourth-quarter 2014 results on Feb 11. In the last reported quarter, TripAdvisor recorded a negative earnings surprise of 23.53%. Let’s see how things are shaping up for this announcement.
Factors to Consider
TripAdvisor posted mixed third quarter results with the bottom line missing the Zacks Consensus Estimate but the top line exceeding the same. Reported revenues of $354.0 were up 9.6% sequentially and 38.8% from the year-ago period, driven by strength in the click-based revenue business and the Viator acquisition. Operating expenses however increased, more than offsetting the revenue growth.
But the company’s strong fundamentals, focus on mobile products, expansion into the international restaurant reservation space and improvement in traffic were encouraging and are expected to positively impact the upcoming quarter.
Acquisitions of Dutch restaurant booking websites, Iens.nl and Seatme.nl., will complement TripAdvisor’s existing restaurant offerings by providing information about hotel bookings, and reviews and opinions about restaurants. The acquisitions will also expand TripAdvisor’s presence in the Netherlands thus helping it build market share.
In addition, the very recent ZeTrip acquisition, an online travel research company, will boost its mobile offerings by improving efficiency. It will also expand TripAdvisor’s user base and drive substantial traffic to its sites.
We believe the company’s aggressive merger and acquisition strategy and solid execution will help its continued growth.
Earnings Whispers?
Our proven model does not conclusively show that TripAdvisor will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 30 cents. Hence, the difference is 0.00%.
Zacks Rank: TripAdvisor has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Procera Networks, Inc. (PKT) with Earnings ESP of +25.00% and a Zacks Rank #2 (Buy)
Criteo SA (CRTO) with Earnings ESP of +4.00% and a Zacks Rank #3 (Hold)
Demandware, Inc. (DWRE) with Earnings ESP of +25.00% and a Zacks Rank #3
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