Navigating – An Investor's Guide

It hasn't been a great evening session for investors, who have watched their shares sink by -3.0% to a price of $45.9. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

The Market May Be Undervaluing's Assets and Equity: Group Limited operates as a travel service provider for accommodation reservation, transportation ticketing, packaged tours and in-destination, corporate travel management, and other travel-related services in China and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, has a trailing 12 month P/E ratio of 22.4 and a P/B ratio of 0.24.'s PEG ratio is 7.7, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company's Revenues Are Declining:

2017 2018 2019 2020 2021 2022
Revenue (M) $4,146 $4,524 $5,122 $2,807 $3,142 $2,907
Gross Margins 82% 79% 79% 78% 77% 78%
Net Margins 8% 4% 20% -18% -3% 7%
Net Income (M) $329 $162 $1,006 -$497 -$86 $206
Net Interest Expense (M) $198 $219 $241 $263 $246 $219
Depreciation & Amort. (M) $75 $79 $94 $121 $113 $92
Diluted Shares (M) 574 567 642 601 634 657
Earnings Per Share $0.57 $0.29 $1.57 -$0.83 -$0.14 $0.31
EPS Growth n/a -49.12% 441.38% -152.87% 83.13% 321.43%
CAPEX (M) $72 $98 $118 $81 $89 $72
Total Debt (M) $6,999 $8,750 $7,189 $8,641 $6,263 $17,837
Net Debt / EBITDA 7.99 12.27 5.3 -60.49 -29.19 143.66
Current Ratio 1.4 1.15 0.98 0.99 1.0 1.0's financial statements include several red flags such as declining revenues and decreasing reinvestment in the business, declining EPS growth, and not enough current assets to cover current liabilities because its current ratio is 1.0. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company has wider gross margins than its peer group working in its favor.

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.