Shares of Expedia Inc. EXPE hit a new 52-week high of $123.75 on Aug 3, eventually closing at $122.59. The company returned 45.3% in the past one year and roughly 43.6% year-to-date. Average volume of shares traded over the last three months was roughly 1,662K.
What is 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 strong second-quarter 2015 results are some of the catalysts driving the stock.
The price appreciation may be attributed to the company’s strong fundamentals and better-than-expected second-quarter results reported on Jul 30. Since then, the stock has moved up 13.9%.
Expedia’s top line increased 21.1% sequentially and 11.2% year over year to $1.66 billion. The company showed particular strength in the core OTA business during the quarter. Core OTA segment revenues grew 25% sequentially and 15.4% year over year backed by the Expedia brand and Hotels.com. However, the company’s loss was much wider than the Zacks Consensus Estimate.
Moreover, Expedia gained momentum from the recent sale of its entire stake in eLong, a low-margin business severely impacted by currency effects, to a group of businesses for roughly $671 million.
Also, Expedia’s recent acquisitions (trivago, Wotif and Travelocity) and investments over the past few years have led to a surge in the share price. With brands like Orbitz.com, CheapTickets, ebookers, HotelClub and Orbitz Partner Network in its portfolio, Expedia boasts a significant competitive advantage over the industry’s leading players like The Priceline Group Inc. and TripAdvisor Inc.
These investments continue to strengthen Expedia’s market position in the U.S. while helping it to expand rapidly in other growth markets. Moreover, the company’s solid financial conditions, increasing market share and strong long-term growth potential position it favorably.
Expedia currently has a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other stocks worth considering in the same space are Amazon.com AMZN, PetMed Express PETS and Groupon GRPN. While Amazon and PetMed sport the same Zacks Rank as Expedia, Groupon has a Zacks Rank #2 (Buy).
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