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Tripadvisor (NASDAQ: TRIP ), an online travel company providing reservations for hotel reservations, transportation, lodging, travel experiences and restaurants, is scheduled to announce its fiscal fourth quarter results on Thursday, February 15. We expect Tripadvisor stock to likely trade lower due to a lack of consensus revenue and earnings estimates. TRIP has experienced a recovery in travel demand so far in FY23, but its revenue growth rate has slowed compared to 2022 levels. Additionally, the company’s rising costs are impacting the company’s profitability, as seen in the first nine months of 2023. With the fourth quarter being a weak season for the company and the uncertainty surrounding its profitability, we believe that the company’s growth rates could likely decline in the near term.
TRIP shares have experienced a sharp 35% decline from $30 levels in early January 2021 to around current levels, versus a roughly 35% gain for the S&P 500 over that roughly 3-year period. It should be noted that TRIP stock has underperformed the broader market in each of the past 3 years. The stock’s return was -5% in 2021, -34% in 2022 and 20% in 2023. In comparison, the S&P 500’s return was 27% in 2021, -19% in 2022 and 24 % in 2023 – indicating that TRIP underperformed the S&P in 2021, 2022 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – it’s been tough in recent years for individual stocks; for IT heavyweights including MSFT, AAPL and NVDA, and even megacap stars GOOG, TSLA and AMZN. In contrast, Trefis’ high-quality portfolio, with a collection of 30 stocks, has outperformed the S&P 500 every year during the same period. Why so? As a group, HQ Portfolio stocks provide better returns with less risk than the benchmark; less of a rollercoaster ride as evidenced by HQ’s portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could TRIP face a similar situation as in 2021, 2022 and 2023? underperformed the S&P over the next 12 months – or will you see a recovery?
Our estimate shows Tripadvisor’s valuation at $18 per share, which is 17% below the current market price. Check out our interactive dashboard analysis Tripadvisor Earnings Preview: What to expect in Q4? For more information.
TRIP Revenue Estimates for FY2023Q4
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(1) Revenue is expected to be below consensus estimates
Trefis estimates Tripadvisor’s Q4 2023 revenue at about $365 million, slightly below the consensus estimate. The company’s third-quarter revenue rose 16% year-over-year (year-over-year) to $533 million. Revenue from core brand TripAdvisorTRIP, however, rose just 2% to $290 million. Viator, on the other hand, saw profit grow 41% year over year to $245 million. The executive also talked about its new scheduling tool with generative artificial intelligence, now in beta, taking advantage of the latest technology. For the whole of 2023, we expect revenue from Tripadvisor to grow 16% year-on-year to $1.7 billion.
(2) EPS is likely to miss consensus estimates
Tripadvisor’s Q4 2023 earnings are expected to reach 18 cents, according to Trefis analysis, missing the consensus estimate. Despite the higher revenue base, the business failed to profit from this. The company’s bottom line was in the red in the first nine months of 2023 at -$0.16, compared to $0.15 in the same period in 2022. The company said selling and marketing expenses increased 29% compared to the previous year, while the increase in the number of employees supported growth also weighed on profitability. The company is spending aggressively on marketing and technology development, especially on the Viator and Tripadvisor platforms. However, the company’s earnings per share rose 12% year-over-year to $0.19 in Q3 2023.
(3) The valuation of the stock price is lower than the current market price
Based on our Tripadvisor valuation, with an EPS estimate of around $1.04 and a P/E ratio of around 17.8x in fiscal 2023, this translates to a price of $18, which is almost 17% below the current market price.
It’s helpful to see how his peers stack up. TRIP Peers shows how Tripadvisor’s stock compares to competitors on metrics that matter. You’ll find other useful comparisons for companies from different industries at Peer Comparisons.
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