Shares of Expedia Inc. EXPE hit a new 52-week high of $115.00 on May 22, eventually closing at $113.00. The company returned 60.4% in one year and roughly 32.6% year-to-date. Average volume of shares traded over the last three months was roughly 4,853K.
What's Driving Expedia?
Expedia is one of the most recognizable online travel companies. It now has an extensive list of brands including Expedia.com, Hotels.com, Hotwire, Egencia, Venere.com, trivago, CarRentals.com and Expedia CruiseShipCenters. Product enhancements, international expansion and decent first-quarter results are some of the catalysts driving the stock.
The price appreciation may also be attributed to the company’s recent sale of its entire stake in eLong, the second largest online travel company in China, to a group of businesses based in the country for roughly $671 million.
Also, Expedia’s recent acquisitions and investments over the past few years have led to a surge in the share price. In February this year, Expedia entered into an agreement to acquire rival Orbitz Worldwide, Inc. OWW for $1.6 billion, or $12 per share. With brands like Orbitz.com, CheapTickets, ebookers, HotelClub and Orbitz Partner Network in its portfolio, Expedia would be a strong competitor to the industry’s leading players, such as The Priceline Group Inc. PCLN and TripAdvisor Inc. TRIP.
The company also bought Travelocity earlier this year for $280 million, and Australian travel booking site Wotif in December last year for $650 million. Other important acquisitions include a 62% stake in trivago for $632 million in 2013, which followed the acquisition of VIA Travel. These investments continue to strengthen Expedia’s market position in the U.S. while helping it expand rapidly in other growth markets.
Moreover, the company gained momentum from strong fundamentals and better-than-expected first-quarter 2015 results reported on Apr 30. Since then, the stock has moved up 19.9%.
Expedia’s top line increased 1.3% sequentially and 14.4% year over year to $984.1 million. The company’s first-quarter results showed strength in some international markets that served as a natural hedge to the currency headwinds affecting most technology players. However, the company incurred a much wider loss in the quarter than the Zacks Consensus Estimate of 6 cents.
While revenue growth remains strong, management stated that increased investments would impact the EBITDA in the next few quarters. However, Expedia’s solid financial conditions, increasing market share and strong long- term growth potential position it favorably.
Expedia currently has a Zacks Rank #3 (Hold).
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