Why Ctrip.com Shares Popped and Then Cooled 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 Chinese travel-service provider Ctrip.com were flying higher today, gaining as much 13%, on a better-than-expected earnings report.

So what: Ctrip trounced earnings estimates, delivering a $0.22 per-share profit on expectations of $0.11. Revenue was also better than expected, growing 19%, to $187 million. CEO Min Fan called the results "solid," and said, "Ctrip is well positioned to capture the fast growing opportunity in the China travel market." The travel specialist also won on upgrade from Brean Capital, which raised its rating to buy from hold, saying Ctrip is taking advantage of opportunities in the online and leisure-oriented markets.

Now what: After flying high out of the gate,Ctrip cooled off from its initial gains, but finished up 3.2%. Some analysts have dismissed Ctrip's prospects, saying there's too much price competition, and margins are slipping. Operating income also took a hit, falling down 48% from a year ago. However, with China's middle class continuing to grow at a rapid pace, and the need for travel service potentially growing, this could be a long-term story. I'd keep an eye on it. You can, too, by adding Ctrip to your Watchlist here.

The article Why Ctrip.com Shares Popped and Then Cooled Off originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Ctrip.com International. The Motley Fool owns shares of Ctrip.com International. 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 Motley Fool has a disclosure policy.

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