Expedia, Inc. operates as an online travel company in the United States and internationally. The company operates through Core OTA, trivago, Egencia, eLong, and HomeAway segments. It facilitates the booking of hotel rooms, airline seats, car rentals, and destination services from its travel suppliers; and acts as an agent in the transaction. The company serves leisure and corporate travelers, offline retail travel agents, and travel service providers through Expedia.com, Hotels.com, Hotwire.com, Venere.com, Wotif.com, Wotif.co.nz, lastminute.com.au, lastminute.com.nz, travel.com.au, and CarRentals.com Websites; and Travelocity, HomeAway, Egencia, trivago, Classic Vacations, Expedia Local Expert, and Expedia CruiseShipCenters brands, as well as Expedia Affiliate Network. It also engages in advertising and media business. The company was founded in 1996 and is headquartered in Bellevue, Washington.
(Summary) (Company) (Chart)
19 June 2016
1yr Target $135.44
Payout Ratio 20.82%
1yr Cap Gain 30.05%
1yr Tot Return 30.97%
EPS (ttm) $4.61
EPS next yr $6.71
Forward P/E 15.53
EPS next 5yr 26.43%
1yr Price Support $177.34
Market Cap $15.83 Bil
Revenues $7.20 Bil
Earnings $598.50 Mil
Profit Margin 8.30%
Quick Ratio 0.50
Current Ratio 0.50
1yr RevGR 15.77%
3yr RevGR 18.10%
5yr RevGR 17.07%
1yr EarnGR 90.63%
3yr EarnGR 41.28%
5yr EarnGR 14.23%
1yr DivGR 27.27%
3yr DivGR 0.39%
5yr DivGR ---
Expedia, Inc. is an online travel company, empowering business and leisure travelers through technology with the tools and information they need to efficiently research, plan, book and experience travel. The company seeks to grow their business through a dynamic portfolio of travel brands, including their majority-owned subsidiaries that feature the world’s broadest supply portfolio — including approximately 435,000 properties in 200 countries, 400 airlines, packages, rental cars, cruises, as well as destination services and activities. Travel suppliers distribute and market products via the company's traditional desktop offerings, as well as through alternative distribution channels including mobile and social media, the company's private label business and their call centers in order to reach an extensive, global audience. In addition, their advertising and media businesses assist other travel providers and reach a large audience of travelers around the globe.
Portfolio of Brands
Expedia operates a strong brand portfolio with global reach, targeting a broad range of travelers, travel suppliers and advertisers. Consumers typically visit multiple travel sites prior to booking travel and Expedia, having a multi-brand strategy, increases the likelihood that those consumers will visit one or more of their sites. Expedia also markets to consumers through a variety of channels, including internet search and metasearch sites, and having multiple brands appear in search results increases the likelihood of attracting visitors to one of their sites. The company's brands also tailor their product offerings to particular traveler demographics. Hotwire finds deep discount deals for the budget-minded travel shopper while the site Classic Vacations brand targets high-end luxury travelers. Brand Expedia spans the widest swath of potential customers with travel options across a broad value spectrum while the site Hotels.com focuses specifically on a hotel only product offering.
Brand Expedia. As the largest full-service online travel brand in the world, the Expedia-branded websites, including Expedia.com in the US, make a large variety of travel products and services available directly to travelers through websites in 31 countries across the globe. Brand Expedia serves a variety of travelers, from families booking a summer vacation to individual travelers arranging a quick weekend getaway, as well as unmanaged business travelers. Travelers can search for, compare information about (including pricing, availability and verified traveler reviews) and book travel products and services on Expedia branded websites and mobile apps, including airline tickets, lodging, car rentals, cruises, insurance and many local expert services from a large number of suppliers, on both a stand-alone and package basis. In the Asia Pacific region, under a joint venture which was launched on July 1, 2011, Brand Expedia partners with low-cost airline AirAsiaTM allowing Expedia sites to be the only official third party online distribution channel for AirAsia content.
Wotif Group. In November 2014, Expedia, Inc. completed the acquisition of Wotif Group, a leading Australian online travel company. After exploring options for the Wotif Group sites and operations, the company made the decision to shift them onto Expedia, Inc.’s technology platforms.
Travelocity. After entering into an exclusive, long-term strategic marketing agreement with Travelocity during the third quarter of 2013, under which Brand Expedia powered the technology platform, supply and customer service for Travelocity’s existing websites in the United States and Canada, Expedia, Inc. announced in January 2015 that it had acquired the Travelocity brand and associated assets from Sabre Corporation.
Hotels.com Worldwide. Hotels.com is focused entirely on marketing and distributing hotel rooms. Hotels.com, with more than 85 localized sites worldwide and market leading mobile apps on all major platforms, offers travelers a broad selection of hotel properties. Because of its single product offering, Hotels.com is often the company's first entry point into a region allowing the company to evaluate the market opportunity prior to adding additional brands and product offerings. Welcome Rewards, the Hotels.com loyalty program, offers travelers the ability to earn one free night for every ten nights stayed.
The Hotwire Group. Hotwire offers a travel booking service that matches flexible, price-sensitive travelers with suppliers who have excess seats, rooms and cars they offer at lower rates than retail. Many of these deals are presented “opaquely” where the brand of the travel supplier is not revealed until after the customer books. Hotwire travelers may enjoy significant discounts by electing to book travel services without knowing certain itinerary details such as brand and exact hotel location, while suppliers create value from excess availability without diluting their core, brand-loyal traveler base. Through its U.S. and international sites, Hotwire partners with leading hotel companies worldwide, brand-name domestic and international airlines, and major car rental companies in the US. Hotwire also operates CarRentals.com, an online car rental marketing and retail firm offering a diverse selection of car rentals direct to consumers. During July 2014, Expedia, Inc. completed an acquisition of Auto Escape Group, one of Europe’s leading online car rental reservation companies. Auto Escape Group has joined with the CarRentals.com brand, allowing it to expand internationally to provide customers more choices across the globe and help the company's supply partners expand their marketing reach.
Expedia Affiliate Network. The company's private label, business-to-business brand Expedia Affiliate Network makes hotel services available to travelers through third-party company-branded websites, including some of the leading regional online travel companies and airline suppliers. EAN offers an Application Programming Interface and template solution and generally compensates partners on a revenue or gross profit-share basis.
Egencia. The company's full-service travel management company offers travel products and services to corporations and corporate travelers. Egencia maintains a global presence in more than 60 countries across North America, Europe and Asia Pacific. Egencia provides, among other things, local telephone assistance with expert travel consultants, centralized online and mobile booking tools for employees of its corporate customers, unique supply targeted at business travelers, and consolidated reporting for global, large and small and medium size enterprise business segments. Egencia charges its corporate clients account management fees, as well as transactional fees for making or changing bookings. In addition, Egencia provides on-site agents to some corporate clients to more fully support the account. Egencia offers consulting and meeting management services.
eLong. Expedia’s majority-owned mobile and online travel service company, based in Beijing, China, specializes in travel products and services in China with a particular focus on driving online hotel bookings. eLong uses web-based distribution technologies, mobile apps and websites, and 24-hour call centers to provide consumers with the ability to make reservations at more than 218,000 properties in China and, through Expedia, hotels in countries worldwide. eLong also offers air ticketing and other travel related information and services. Travelers can access eLong travel products and services through its mobile applications and websites, including www.elong.com and www.elong.net.
trivago. trivago is the company's majority-owned hotel metasearch company, based in Dusseldorf, Germany, featuring price comparison from more than 700,000 hotels on over 250 booking sites worldwide. Officially launched in 2005, trivago is one of the best known travel brands in Europe and is expanding globally with sites in 49 countries in more than 25 languages.
Venere. The Venere website, www.venere.com, lists hotel properties in hundreds of locations around the world and provides hotel partners with geographically diverse sources of demand.
Classic Vacations. Classic Vacations offers individually tailored vacations primarily through a national network of third-party retail travel agents. Classic delivers a full line of premium vacation packages — air, hotels, car rentals, activities, cruises and private transportation — to create customized luxury vacations in Hawaii, the Caribbean, Mexico, Costa Rica, Europe, Australia, New Zealand, Fiji, Maldives, Dubai, Seychelles and Tahiti.
Expedia Local Expert. The Expedia Local Expert network offers online and in-market concierge services, activities, experiences, attractions and ground transportation. With access to a rich portfolio of thousands of tours and adventures, Local Expert can be found on 27 Expedia-branded websites and operates more than 100 concierge and activity desks in major resort destinations.
Expedia CruiseShipCenters. Expedia CruiseShipCenters is a leading seller of cruises and vacations. The franchise company has 180 retail locations across North America, a team of nearly 4,000 professionally-trained vacation consultants and a searchable online database of more than 200,000 staterooms.
Expedia, Hotels.com, Egencia, EAN, and Hotwire brands operate both domestically and through international points of sale, including in Europe, Asia Pacific, Canada and Latin America. The company owns a majority share of eLong, a leading online travel company in China. Expedia also own Venere, a European brand, which focuses on marketing hotel rooms in Southern Europe. Egencia, the company's corporate travel business, operates in more than 60 countries around the world and continues to expand, including its 2012 acquisition of VIA Travel. The company also partners in a 50/50 joint venture with AirAsia — a low cost carrier serving the Asia-Pacific region — to jointly grow an online travel agency business. In 2014, approximately 41% of our worldwide gross bookings and 47% of worldwide revenue were through international points of sale compared to just 22% for both worldwide gross bookings and revenue in 2005. Expedia has the goal of generating 65% of their revenues through businesses and points of sale outside of the US.
In expanding their global reach, they have leveraged their investments in technology, operations, brand building, supplier relationships and other initiatives that it has made since the launch of Expedia.com in 1996. Their scale of operations enhances the value of technology innovations they introduce on behalf of their travelers and suppliers. This should afford the company the ability to negotiate competitive rates with supply partners, provide breadth of choice and travel deals to the traveling customer through an expanding supply portfolio and create opportunities for new value added offerings such as loyalty programs. The size of Expedia’s worldwide traveler base makes their sites an increasingly appealing channel for travel suppliers to reach customers. In addition, the sheer size of their user base and search query volume allows Expedia to test new technologies very quickly in order to determine which innovations are most likely to improve the travel research and booking process, and then roll those features out to a worldwide audience.
Understanding the width and depth of this company and the appetite for travel throughout the world makes and investment in this industry quite obvious. Looking at the numbers associated with Expedia make this company the obvious candidate within this industry for accumulation.
With an estimated one year return of over 30% and a five year estimated earnings growth rate of over 26%, it's easy to see that these stock price increases highly likely to occur. While I don't usually buy stock with a P/E ratio above 20, I do make exceptions for companies growing at an estimated rate faster than 20% per year. And that's the case with Expedia.
I also like the fact that the company has been increasing its dividend for the last 6 years. I acknowledge that this may not be a long time but it has been sufficiently long to estimate that it is secure and growing. And with a payout ratio of only 20% plus earnings that have been growing in the mid to upper teens, I expect the dividend to be increases significantly in the future.
All this leads me to believe that the stock price of this company will be significantly higher than it is today. In fact, I believe it'll be higher than most analyst expect as earnings begin to increase faster going forward. Add in an increasing dividend and this looks like a great investment for my portfolio. As a result, I intend to start a position in this company this week as the price bounces off the lower Bollinger Band. This appears to not only be a great company but currently being sold at a great price.
As always, I'll start with a relatively small position and then add to that position through the reinvestment of dividends, the sale of stock options for reinvestment back into the shares, and additional purchases on the open market at opportune prices.