Why Expedia Shares Took Off
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online travel company Expedia (NAS: EXPE) soared 26% on Friday after its quarterly results flew past Wall Street expectations.
So what: Expedia's wide first-quarter beat -- adjusted EPS of $0.26 on revenue of $816.5 million versus Wall Street's view of just $0.15 and $790.9 million, respectively -- is reigniting optimism over its long-term growth potential. The company saw particularly strong growth in hotel-room bookings, suggesting that the travel industry is indeed starting to recover.
Now what: Don't expect the operating momentum to wane anytime soon. "While we're quite pleased with Q1 performance and are incrementally confident about our ability to deliver these full year results," noted CFO Mark Okerstrom in a conference call with analysts, "the majority of our annual adjusted EBITDA growth is expected to build in the back half of the year. And as such, the real story of our full year results is very much yet to be told." Unfortunately, when you couple today's big rally with the uncertainty that still surrounds the space, the risk/reward at this point seems a bit unfavorable.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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