Required knowledge for Expedia (EXPE) Investors

We've been asking ourselves recently if the market has placed a fair valuation on Expedia. Let's dive into some of the fundamental values of this large-cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.

Expedia's Valuation Is in Line With Its Sector Averages:

Expedia Group, Inc. operates as an online travel company in the United States and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, Expedia has a trailing 12 month P/E ratio of 24.0 and a P/B ratio of 10.96.

When we divideExpedia's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.56, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.

The Business Has Negative Margins on Average:

2018 2019 2020 2021 2022 2023
Revenue (MM) $11,223 $12,067 $5,199 $8,598 $11,667 $12,260
Operating Margins 6.0% 7.0% -52.0% 2.0% 9.0% 10.0%
Net Margins 4.0% 5.0% -2.0% 0.0% 3.0% 7.0%
Net Income (MM) $406 $572 -$116 $15 $352 $899
Net Interest Expense (MM) $190 $173 $360 $351 $277 $245
Depreciation & Amort. (MM) $676 $712 $893 $814 $792 $789
Earnings Per Share $2.65 $3.77 -$19.0 -$1.8 $2.17 $5.71
Diluted Shares (MM) 153 150 141 150 162 152
Free Cash Flow (MM) $1,097 $1,607 -$4,631 $3,075 $2,778 $2,321
Capital Expenditures (MM) $878 $1,160 $797 $673 $662 $803
Net Current Assets (MM) -$3,369 -$4,012 -$834 -$1,697 -$2,460 -$3,085
Long Term Debt (MM) $3,717 $4,189 $8,216 $7,715 $6,240 $0
Net Debt / EBITDA 5.2 5.36 -4.45 11.03 5.69 3.23
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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