Why Ctrip Shares Soared


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 website Ctrip.com International surged 19% today after its quarterly results and outlook topped Wall Street expectations.

So what: Ctrip's first-quarter profit sank 26% on higher expenses, but a wide top-line beat -- revenue surged 27% to $198 million versus the consensus $172.6 million -- coupled with upbeat guidance is prompting analysts to raise their growth estimates yet again. While operating margins shrank 500 basis points over the year-ago period, strong volume growth across all of its segments reinforces optimism over its market-share gains and competitive position going forward.

Now what: For the current quarter, management expects revenue growth of roughly 15%-20% over the year-ago period. "We will continue to focus on our mobile strategy, improve price competitiveness, strengthen partner relationships, and enhance marketing effectiveness," said Chairman and CEO James Liang. "We are excited to capture the opportunities in the travel industry in China and will work hard to elevate our leadership to the next level." With the stock busting through its 52-week highs and trading at a forward P/E of around 30, however, much of that opportunity might already be baked into the price.

Interested in more info on Ctrip? Add it to your watchlist.

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The article Why Ctrip Shares Soared originally appeared on Fool.com.

Fool contributor Brian Pacampara 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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