Expedia Shares Surge 8% on Q3 Earnings Beat

Expedia Group (NASDAQ:EXPE) delivered stronger-than-expected fourth-quarter results, surpassing analyst estimates and sending shares up 17% intra-day today. The online travel giant benefited from sustained travel demand, accelerating growth across its core consumer brands and B2B segment.

The company posted adjusted earnings per share of $2.39, comfortably beating the analyst consensus of $2.02. Revenue climbed 10% year-over-year to $3.18 billion, exceeding the forecasted $3.07 billion. Total gross bookings surged 13% YoY in Q4, reflecting robust momentum across Expedia’s travel ecosystem.

Lodging demand remained strong, with room nights booked rising 12% and hotel bookings jumping 14% compared to the prior year. Both B2C and B2B segments showed accelerating growth, with sequential gains of 5 percentage points in Q4, reaching 9% and 24% growth, respectively.

Profitability also saw a meaningful boost. Adjusted EBITDA rose 21%, accompanied by a 175 basis point margin expansion, while adjusted EBIT soared 50%, driven by a 282 basis point margin improvement.

Expedia Group, Inc. (NASDAQ: EXPE) is a leading company in the online travel industry, offering a variety of services through its extensive brand portfolio. The company is known for its travel booking platforms, which include Expedia.com, Hotels.com, and VRBO, among others. Expedia competes with other major players like Booking Holdings, which also offers travel services but at a higher price point.

In the past month, analysts set an average price target of $166 for Expedia's stock, reflecting their short-term expectations. This target considers recent developments and market conditions. Notably, Citigroup has set a more optimistic price target of $200, suggesting a positive outlook for Expedia's financial performance, as highlighted by Citigroup.

Three months ago, the average price target was higher at $182.2, indicating greater optimism among analysts. This could be due to favorable market trends or company-specific factors. Expedia's strong track record of surpassing earnings expectations and its potential for an earnings beat in the upcoming report may have contributed to this optimism.

A year ago, the average price target was $156.48, showing an upward trend in analysts' expectations over the past year. This trend aligns with Expedia's recent revenue growth of 3.33% year-over-year and 14.11% quarter-over-quarter in the third quarter of 2024. The company's improved operating and net margins further support this positive outlook.

Expedia's low debt level and ongoing share buyback program, expected to continue into 2025, are anticipated to enhance the company's valuation. Additionally, the company's international expansion efforts and enhancements in VRBO and bundled programs contribute to its growth potential. These factors, along with the appointment of a new Chief Financial Officer, support the positive outlook for Expedia's stock.

• Expedia Group, Inc. (NASDAQ:EXPE) is expected to release its quarterly earnings on February 6, 2025, with an estimated EPS of $2.06 and projected revenue of $3.07 billion.
• The revenue projection represents a 6.45% increase from the same quarter last year, driven by increased bookings and expansion in its B2B segment.
• Despite positive revenue projections, Expedia faces strong competition and a downward revision of the consensus EPS estimate by 1.3% over the past 30 days.

Expedia Group, Inc. (NASDAQ:EXPE) is a leading online travel company offering a wide range of services, including hotel bookings, flight reservations, and vacation packages. Operating through various brands such as Expedia.com, Hotels.com, and Vrbo, Expedia is a major player in the travel industry, competing with giants like Booking Holdings and TripAdvisor.

As Expedia prepares to release its quarterly earnings on February 6, 2025, analysts estimate the earnings per share (EPS) to be $2.06, with projected revenue of approximately $3.07 billion. This revenue projection marks a 6.45% increase from the same quarter last year, as highlighted by Zacks. The anticipated growth is attributed to increased bookings and expansion in its B2B segment.

Despite the positive outlook, strong competition may challenge Expedia's growth in the fourth quarter. The consensus EPS estimate has been revised downwards by 1.3% over the past 30 days, indicating analysts' adjustments to their initial estimates. Such revisions can significantly influence investor actions, as empirical research shows a strong correlation between earnings estimate trends and short-term stock price performance.

Expedia has a history of exceeding the Zacks Consensus Estimate, with an average surprise of 42.74% over the past four quarters. If the company surpasses the current consensus estimates, it could positively impact the stock's price. Conversely, if the results fall short, the stock may experience a decline. The outcome of the earnings report and subsequent management discussion will be crucial for the stock's future performance.

The company's financial metrics provide additional insights into its valuation and financial health. Expedia's price-to-earnings (P/E) ratio is approximately 20.64, while its price-to-sales ratio stands at about 1.56. The enterprise value to sales ratio is around 1.59, reflecting the company's total valuation relative to its sales. However, the debt-to-equity ratio is notably high at approximately 4.96, indicating a significant reliance on debt financing.

Expedia (NASDAQ:EXPE) shares rose more than 3% intra-day today after BofA Securities analysts upgraded the company to Buy from Neutral, raising the price target to $221 from $187. The upgrade reflected growing optimism around improving travel trends, achievable growth targets, and a discounted valuation relative to peers.

Data from RevPAR (revenue per available room) and aggregated credit and debit card transactions signal early signs of recovery in U.S. travel, supporting a more favorable outlook for 2025. With easy comparisons to previous years and achievable street estimates projecting 10% EBITDA growth for 2025, Expedia is positioned for continued financial improvement.

The appointment of a new CEO and improved messaging and execution were also highlighted as potential catalysts, attracting long-term investors back to the stock. Despite these positives, Expedia trades at a significant valuation discount compared to Booking Holdings, with an EV/EBITDA multiple of 8x versus Booking’s 19x for 2025. Both companies have similar EBITDA growth expectations of 10–12%, underscoring the relative undervaluation of Expedia shares.

• Expedia Group Inc. (NASDAQ:EXPE) stock value significantly increased by over 10% due to an earnings report that exceeded Wall Street's expectations.
• The company's strong performance in the second quarter demonstrates its operational efficiency and strong market presence amidst a competitive online travel market.
• Despite the positive results, Expedia issued a cautionary note about softening travel demand in July, indicating potential challenges ahead.

NASDAQ:EXPE, Expedia Group Inc., a leading online travel company, saw its stock value significantly increase by over 10% in the extended session on Thursday. This remarkable surge was a direct result of the company's earnings report for the second quarter, which exceeded Wall Street's expectations. Expedia's success in this quarter highlights its ability to outperform amidst a competitive online travel market, where it competes with other giants like Booking Holdings and Airbnb.

The company's financial performance in the second quarter serves as a testament to its operational efficiency and strong market presence. By surpassing Wall Street's forecasts, Expedia demonstrated its resilience and adaptability in a sector that is highly susceptible to economic fluctuations and consumer trends. This achievement is particularly noteworthy, considering the ongoing challenges in the travel industry, including changing travel restrictions and consumer confidence levels.

However, Expedia's cautionary note regarding the current quarter adds a layer of complexity to its outlook. The company observed a softening in travel demand in July, which could signal a shift in consumer behavior or broader economic trends affecting the travel sector. This caution suggests that while Expedia has navigated the past quarter successfully, it remains vigilant about potential challenges that could impact its performance moving forward.

The mixed outlook presented by Expedia underscores the dynamic nature of the travel industry, where companies must continuously adapt to changing market conditions. Despite the positive performance in the second quarter, the cautionary note for the current quarter reflects Expedia's realistic approach to its business strategy, acknowledging both its achievements and the uncertainties that lie ahead.

BTIG analysts reaffirmed a Buy rating and a $150 price target for Expedia (NASDAQ:EXPE), noting that while Expedia has some weak spots, such as VRBO and air travel, there are also significant strengths, particularly in its B2B segment.

Despite limited disclosures on key metrics like room nights or bookings, it was recently revealed that B2B accounted for approximately 100 million room nights last year. This new information provides a clearer picture of the growth composition, with B2B contributing to around 60% of room night growth in 2023.

The analysts suggest that the path to high-single-digit room night growth this year is feasible, with B2C expected to rise by mid-single digits (7% last year) and B2B projected to increase by 16-19% (30% last year).