Expedia Tanks After Mixed Q4 Earnings, Weak Guidance Ahead: Is it Time to Sell EXPE?

Expedia (EXPE) shared Q4 earnings after the market closed Thursday, which consisted of a mixed bag of results. There was plenty of hype leading into yesterday, but the stock tanked Friday morning in response to the news.

The online travel company grew revenue 10% for the quarter to $2.887 billion. Analysts were expecting just 9.7% growth and $2.873 billion. Meanwhile, earnings climbed 37% year over year to $1.72 per share – narrowly outperforming the consensus estimate of $1.67 per share.

All this seems upbeat – so what’s caused the stock to plummet 18% this morning after reaching a 52 week high yesterday? The outlook for the current quarter and the remainder of the year looks bleak.

Bookings for Q4 may have grown 6% to $21.672 billion, but this was still shy of Wall Street’s expectation. The holiday quarter is widely considered to be the most important for travel companies like Expedia.

The company suffered through a tumultuous past few years after the pandemic halted travel, but it’s been working to rebound since then. While it does appear that there is light at the end of the tunnel, the lackluster start to the year raises concern – leading to a downgrade for EXPE by Bank of America. Analysts moved their price target from $181 to $156. 

What really stole the spotlight for the earnings call, though, was the announcement of a new CEO. Peter Kern will step down in May after 4 years of serving at the helm. 

Ariane Gorin will take the reigns after serving as president of Expedia for Business. With 10 years of experience under her belt, Gorin was the ideal candidate, as the board wanted someone internal to take over.

EXPE had rallied over the past few months, and still sits 11% higher in the 3 month window while factoring in today’s step backwards. That being said, we took a look through VectorVest’s stock analysis software and found reason to sell this stock today…

EXPE May Have Excellent Upside Potential and Fair Safety, But its Timing is Poor

VectorVest saves you time and stress while empowering you to win more trades with less work, all through a proprietary stock rating system that’s outperformed the S&P 500 index by 10x over the past 20+ years. 

Three ratings offer all the context and insight you need to make clear, calculated decisions. These are relative value (RV), relative safety (RS), and relative timing (RT). 

Each sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. Better yet, you’re given a buy, sell, or hold recommendation for any given stock at any given time based on the overall VST rating. As for EXPE, here’s what you need to know:

• Excellent Upside Potential: The RV rating compares a stock’s long term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates and risk. This offers much better insight than a simple comparison of price to value alone. EXPE has an excellent RV rating of 1.44 right now.
• Fair Safety: The RS rating is a risk indicator. It’s calculated through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. Although the RS rating of 0.93 is a bit below the average, it’s still deemed fair.
• Poor Timing: The biggest issue for EXPE right now is the negative price trend putting pressure on the stock’s price. The RT rating of 0.70 is poor. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 1.03 is above the average and considered fair, but VectorVest deems this stock a SELL today. Learn more about this situation with a free stock analysis today and make your next trade with confidence!

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VectorVest advocates buying safe, undervalued stocks, rising in price. EXPE is down 18% today after delivering a mixed bag of earnings - while the company beat the top and bottom line, bookings fell short. The announcement of a new CEO creates even more uncertainty of the road ahead, too. The stock may have excellent upside potential and fair safety, but its timing is poor.

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