Tripadvisor, Inc. (TRIP) is an online travel company that operates in two segments, Hotels, Media & Platform; and Experiences & Dining. The company operates various TripAdvisor-branded websites and manages travel media brands that offer users comprehensive and trip-taking resources in the travel industry, such as cruisecritic.com. thefork.com, jetsetter.com, housetrip.com, and viator.com.
The online travel company reported robust financial results in the second quarter of fiscal 2022. The continued strong performance across all segments is driven by high consumer demand for leisure travel after two years of travel interruptions owing to the pandemic. The company is a trusted resource for travelers, diners, and experience seekers.
During the second quarter, average monthly unique users on Tripadvisor-branded websites, a leading indicator of consumer travel demand, grew 19% from the prior-year period and was nearly 83% of the comparable period in 2019 (pre-COVID-19 timeframe). The company’s second-quarter revenue of $417 million increased 77% year-over-year and was in line with the same period in 2019.
“Our strong performance was driven by high growth rates in Viator and TheFork and the continued recovery in our hotels business. Our results give us confidence that our investment plan, which balances growth and margin expansion, is working to capture share in key strategic growth areas and demonstrates the value we are driving for customers across categories,” said Ernst Teunissen, TRIP’s Chief Financial Officer.
The stock has declined 14.3% year-to-date to close the last trading session at $24.39. However, analysts expect the stock to hit $27.90 in the upcoming months, representing a 14.5% upside potential.
Robust Financials
For the fiscal 2022 second quarter ended June 30, 2022, TRIP’s total revenue increased 77.5% year-over-year to $417 million. Its operating income came in at $63 million, compared to a loss of $35 million in the prior-year period. The company’s total adjusted EBITDA grew 336% year-over-year to $109 million. Its non-GAAP net income was $54 million versus a $10 million loss in the comparable period in 2021.
Furthermore, the company’s non-GAAP earnings per share came in at $0.03, compared to a loss per share of $0.07 in the prior-year quarter. Also, cash inflows from operating activities improved 134.1% from the year-ago value to $295 million, while free cash flow came in at $282 million, up 151.8% year-over-year.
Favorable Analyst Estimates
Analysts expect TRIP’s revenue for the fiscal 2022 third quarter (ending September 2022) to come in at $441.23 million, indicating a rise of 45.5% from the same period in 2021. The current quarter's $0.38 consensus EPS estimate suggests a 137.5% year-over-year increase.
In addition, TRIP’s revenue and EPS for the fiscal year 2022 (ending December 2022) are expected to rise 61.7% and 396.7% year-over-year to $1.46 billion and 0.89, respectively. Analysts expect the company’s revenue and EPS for the next year to grow 15.8% and 68.5% year-over-year to $1.69 billion and $1.50, respectively. Also, Street expects the company’s EPS to grow 110% per annum over the next five years.
High Profitability
TRIP’s trailing-12-month gross profit margin of 92.15% is 82.4% higher than the 50.52% industry average. Its trailing-12-month levered FCF margin of 24.06% is 200.9% higher than the 8.00% industry average. Likewise, the stock’s trailing-12-month CAPEX/Sales of 4.58% is 7.3% higher than the industry average of 4.27%.
POWR Ratings Show Promise
TRIP's overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. TRIP has a grade of A for Quality, in sync with its higher-than-industry profitability metrics. In addition, it has a grade of A for Growth, consistent with its solid revenue and earnings growth estimates.
TRIP is ranked #5 out of 65 stocks in the Internet industry.
Beyond what I have stated above, we have also given TRIP grades for Sentiment, Value, Momentum, and Stability. Get access to all TRIP ratings here.
Bottom Line
TRIP’s strong performance in the second quarter of 2022 is primarily driven by increased consumer demand for travel. Despite record-high prices and recession fears, consumer travel demand has remained significantly high this year.
Moreover, analysts are bullish about the company’s revenue and earnings growth prospects. So, we think it could be wise to add this stock to your portfolio now.
How Does Tripadvisor, Inc. (TRIP) Stack Up Against its Peers?
TRIP has an overall POWR Rating of B. One could also check out these other stocks within the Internet industry with a B (Buy) rating: trivago N.V. (TRVG), Yelp Inc. (YELP), and Expedia Group Inc. (EXPE).
TRIP shares were trading at $24.19 per share on Monday afternoon, down $0.20 (-0.82%). Year-to-date, TRIP has declined -11.26%, versus a -18.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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