Expedia Inc (NASDAQ:EXPE), one of the most popular online travel companies in the world, has dropped 20% of its share price in just the last month.
The stock went off a cliff last month when the company released earnings which although showed sales growth, the results missed analyst expectations. Revenue of $2.97 billion was up 15% from the previous year but just shy of the $2.98 billion that was expected, and per-share earnings of $2.51 fell well below the $2.62 that analysts were looking for.
Unfortunately Expedia’s operations were impacted as a result of recent natural disasters which disrupted travel plans for many people and the company said that had a negative effect on its bottom line.
The problem that some investors may have is that even after the decline in price, the company still trades at nearly 50 times its earnings, and without the drop in price would be close to 60. However, if we compare to another popular travel site like Tripadvisor Inc (NASDAQ:TRIP), which trades at nearly 66 times earnings, Expedia doesn’t seem too expensive.
Despite rising competition and more online sites vying for travelers, Expedia has still been able to achieve strong growth over the years. Since 2013, sales of $4.8 billion grew to $8.8 billion this past fiscal year, for an increase of 84% and a compounded annual growth rate of 23%.
The stock’s recent decline looks a little overblown when you consider the impact that weather had on the company’s results. Expedia could be a great stock to buy on the dip.
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