TripAdvisor Inc Valuation – January 2019 $TRIP

Company Profile (excerpt from Reuters): TripAdvisor, Inc., incorporated on July 20, 2011, is an online travel company which owns and operates a portfolio of online travel brands. TripAdvisor, the Company’s brand, is a travel site. The Company operates through two segments: Hotel and Non-Hotel. The Company’s platform also enables users to compare real-time pricing and availability for these experiences, as well as to book hotels, flights, cruises, vacation rentals, tours, activities and attractions, and restaurants, on either a TripAdvisor site or application, or a travel partner site or application. As of December 31, 2017, the Company’s TripAdvisor-branded Websites included tripadvisor.com in the United States and localized versions of the TripAdvisor Website in 48 markets and 28 languages around the world. As of December 31, 2017, the Company featured approximately 600 million reviews and opinions on 7.5 million places to stay, places to eat and things to do, including 1,060,000 hotels and accommodations and 835,000 vacation rentals, 4.6 million restaurants and 915,000 activities and attractions around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TRIP – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,712,066,189 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.04 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 9.09% Fail
6. Moderate PEmg Ratio PEmg < 20 84.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.48 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.04 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.66
MG Growth Estimate -4.25%
MG Value $1.25
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $9.64
MG Value based on 0% Growth $5.65
Market Implied Growth Rate 37.89%
Current Price $56.02
% of Intrinsic Value 4487.97%

Tripadvisor Inc Common Stock does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.34 in 2014 to an estimated $0.66 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 37.89% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tripadvisor Inc Common Stock revealed the company was trading above its Graham Number of $12.95. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 84.28, which was above the industry average of 38.01. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.25.

Tripadvisor Inc Common Stock scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.25
Graham Number $12.95
PEmg 84.28
Current Ratio 2.04
PB Ratio 5.48
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $926,000,000
Total Current Liabilities $453,000,000
Long-Term Debt $0
Total Assets $2,192,000,000
Intangible Assets $889,000,000
Total Liabilities $750,000,000
Shares Outstanding (Diluted Average) 141,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.76
Dec2017 -$0.14
Dec2016 $0.82
Dec2015 $1.36
Dec2014 $1.55
Dec2013 $1.41
Dec2012 $1.37
Dec2011 $1.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.66
Dec2017 $0.74
Dec2016 $1.23
Dec2015 $1.42
Dec2014 $1.34
Dec2013 $1.10
Dec2012 $0.81
Dec2011 $0.44

Recommended Reading:

Other ModernGraham posts about the company

10 Most Overvalued Stocks of the S&P 500 – July 2018
TripAdviser Inc Valuation – March 2018 $TRIP
TripAdvisor Inc Valuation – June 2016 $TRIP
TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Tripadvisor Stock Analysis – August 2015 Update $TRIP

Other ModernGraham posts about related companies

ILG Inc Valuation – July 2018 $ILG
Royal Caribbean Cruises Ltd Valuation – Initial Coverage June 2018 $RCL
Expedia Group Inc Valuation – May 2018 $EXPE
Booking Holdings Inc Valuation – April 2018 $BKNG
TripAdviser Inc Valuation – March 2018 $TRIP
Expedia Inc Valuation – February 2017 $EXPE
Priceline Group Inc Valuation – July 2016 $PCLN
TripAdvisor Inc Valuation – June 2016 $TRIP
TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Expedia Inc. Analysis – October 2015 Update $EXPE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

TripAdviser Inc Valuation – March 2018 $TRIP

Company Profile (obtained from Marketwatch): TripAdvisor, Inc. owns and operates a portfolio of online travel brands. It operates its business through the Hotel and Non-Hotel segments. The Hotel segment includes revenue generated from services related to hotels, including click-based and display-based advertising revenue from making hotel room nights, airline reservations, and cruise reservations available for price comparison and booking, as well as subscription-based products such as Business Listings, transaction-based products such as Jetsetter and Tingo, and other revenue related to hotels. The Non-Hotel segment consists of the aggregation of three operating segments, which include its attractions, restaurants and vacation Rentals businesses. The company was founded by Nicholas Shanny and Stephen Kaufer in July 2011 and is headquartered in Needham, MA.

TRIP Chart

TRIP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TRIP – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,122,242,451 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.67 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -27.97% Fail
6. Moderate PEmg Ratio PEmg < 20 58.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.43 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.67 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.37 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.75
MG Growth Estimate -4.25%
MG Value $0.61
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $10.89
MG Value based on 0% Growth $6.39
Market Implied Growth Rate 25.06%
Current Price $44.05
% of Intrinsic Value 7184.35%

Tripadvisor Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.41 in 2014 to an estimated $0.75 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 25.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tripadvisor Inc revealed the company was trading above its Graham Number of $15. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 58.63, which was above the industry average of 33.52. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.61.

Tripadvisor Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $0.61
Graham Number $15.00
PEmg 58.63
Current Ratio 2.67
PB Ratio 4.43
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $993,000,000
Total Current Liabilities $372,000,000
Long-Term Debt $230,000,000
Total Assets $2,272,000,000
Intangible Assets $900,000,000
Total Liabilities $909,000,000
Shares Outstanding (Diluted Average) 137,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.02
Dec2017 -$0.14
Dec2016 $0.82
Dec2015 $1.36
Dec2014 $1.55
Dec2013 $1.41
Dec2012 $1.37
Dec2011 $1.32
Dec2010 $1.04

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.75
Dec2017 $0.74
Dec2016 $1.23
Dec2015 $1.42
Dec2014 $1.41
Dec2013 $1.24
Dec2012 $1.02
Dec2011 $0.72
Dec2010 $0.35

Recommended Reading:

Other ModernGraham posts about the company

TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Tripadvisor Stock Analysis – August 2015 Update $TRIP
30 Companies in the Spotlight This Week – 5/23/15
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
28 Companies in the Spotlight This Week – 2/28/15

Other ModernGraham posts about related companies

Expedia Inc Valuation – February 2017 $EXPE
Priceline Group Inc Valuation – July 2016 $PCLN
TripAdvisor Inc Valuation – June 2016 $TRIP
TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Expedia Inc. Analysis – October 2015 Update $EXPE
Tripadvisor Stock Analysis – August 2015 Update $TRIP
Priceline Group Annual Valuation – 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP
Priceline Group Inc. Quarterly Valuation – February 2015 $PCLN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

TripAdvisor Inc Valuation – June 2016 $TRIP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how TripAdvisor Inc (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. is an online travel company, which owns and operates a portfolio of online travel brands. TripAdvisor, the Company’s flagship brand, is a travel Website. The Company operates in two segments. The Hotel segment’s services include making hotel room nights available for price comparison and booking, including instant booking feature, as well as subscription-based hotel products, such as Business Listings, and transaction-based hotel products, such as Jetsetter and Tingo. Its Other segment consists of three segments, which include Attractions, Restaurants and Vacation Rentals. The Company, through viator.com (Viator), provides information and services for researching and booking destination activities around the world. Its Restaurants business consists of its Websites that provide online and mobile reservation services. The Company offers individual property owners and property managers to list their properties available for rental and connect with travelers.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TRIP – June 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,229,686,798 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.23 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 14566.67% Pass
6. Moderate PEmg Ratio PEmg < 20 44.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.49 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.23 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.21 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

TRIP value chart June 2016

EPSmg $1.45
MG Growth Estimate 6.37%
MG Value $30.78
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $21.01
MG Value based on 0% Growth $12.31
Market Implied Growth Rate 18.07%
Current Price $64.66
% of Intrinsic Value 210.07%

Tripadvisor Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.02 in 2012 to an estimated $1.45 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.07% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Tripadvisor Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

TRIP charts June 2016

Net Current Asset Value (NCAV) $1.46
Graham Number $18.35
PEmg 44.63
Current Ratio 2.23
PB Ratio 6.49
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $964,000,000
Total Current Liabilities $432,000,000
Long-Term Debt $110,000,000
Total Assets $2,214,000,000
Intangible Assets $909,000,000
Total Liabilities $750,000,000
Shares Outstanding (Diluted Average) 147,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.49
Dec2015 $1.36
Dec2014 $1.55
Dec2013 $1.41
Dec2012 $1.37
Dec2011 $1.32
Dec2010 $1.04

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.45
Dec2015 $1.42
Dec2014 $1.41
Dec2013 $1.24
Dec2012 $1.02
Dec2011 $0.72
Dec2010 $0.35

Recommended Reading:

Other ModernGraham posts about the company

TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Tripadvisor Stock Analysis – August 2015 Update $TRIP
30 Companies in the Spotlight This Week – 5/23/15
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
28 Companies in the Spotlight This Week – 2/28/15

Other ModernGraham posts about related companies

TripAdvisor Inc. Valuation – November 2015 Update $TRIP
Expedia Inc. Analysis – October 2015 Update $EXPE
Tripadvisor Stock Analysis – August 2015 Update $TRIP
Priceline Group Annual Valuation – 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP
Priceline Group Inc. Quarterly Valuation – February 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – November 2014 $TRIP
Priceline.com Inc. Quarterly Valuation – November 2014 $PCLN
Expedia Inc. Annual Stock Valuation – 2014 $EXPE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

TripAdvisor Inc. Valuation – November 2015 Update $TRIP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how TripAdvisor Inc. (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. (TripAdvisor) owns and operates a portfolio of online travel brands. TripAdvisor, the Company’s brand, is a travel Website. The Company operates in two segments: Hotel and Other. Its Other segment consists of three operating segments, which include its vacation rentals, restaurants and attractions businesses. The Company’s branded Websites include tripadvisor.com in the United States and localized versions of the TripAdvisor Website in 45 other countries, including China under the brand, daodao.com and are offered in 28 languages. It features reviews and opinions on accommodations, including hotels and accommodations and vacation rentals, as well as restaurants and attractions in approximately 147,000 destinations throughout the world. In addition to user-generated content, its Websites feature price comparison tools and links to partner Websites, including travel advertisers, where users can book their travel arrangements.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TRIP – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,981,342,794 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.65 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 15033.33% Pass
6. Moderate PEmg Ratio PEmg < 20 55.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.13 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.65 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.63 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

TRIP value Chart November 2015

EPSmg $1.49
MG Growth Estimate 15.00%
MG Value $57.47
Opinion Overvalued
MG Value based on 3% Growth $21.64
MG Value based on 0% Growth $12.69
Market Implied Growth Rate 23.53%
Current Price $82.92
% of Intrinsic Value 144.29%

TripAdvisor Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the short operating history, along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.72 in 2011 to an estimated $1.49 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 23.53% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on TripAdvisor Inc. (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

TRIP Charts November 2015

Net Current Asset Value (NCAV) $0.49
Graham Number $18.08
PEmg 55.55
Current Ratio 2.65
PB Ratio 9.13
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $943,000,000
Total Current Liabilities $356,000,000
Long-Term Debt $370,000,000
Total Assets $2,198,000,000
Intangible Assets $921,000,000
Total Liabilities $872,000,000
Shares Outstanding (Diluted Average) 146,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.58
Dec14 $1.55
Dec13 $1.41
Dec12 $1.37
Dec11 $1.32
Dec10 $1.04

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.49
Dec14 $1.41
Dec13 $1.24
Dec12 $1.02
Dec11 $0.72
Dec10 $0.35

Recommended Reading:

Other ModernGraham posts about the company

Tripadvisor Stock Analysis – August 2015 Update $TRIP
30 Companies in the Spotlight This Week – 5/23/15
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
28 Companies in the Spotlight This Week – 2/28/15
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP

Other ModernGraham posts about related companies

Expedia Inc. Analysis – October 2015 Update $EXPE
Tripadvisor Stock Analysis – August 2015 Update $TRIP
Priceline Group Annual Valuation – 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP
Priceline Group Inc. Quarterly Valuation – February 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – November 2014 $TRIP
Priceline.com Inc. Quarterly Valuation – November 2014 $PCLN
Expedia Inc. Annual Stock Valuation – 2014 $EXPE
Tripadvisor Inc. Quarterly Valuation – August 2014 $TRIP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tripadvisor Stock Analysis – August 2015 Update $TRIP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tripadvisor Stock Analysis (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. (TripAdvisor) owns and operates a portfolio of online travel brands. TripAdvisor, the Company’s brand, is a travel Website. The Company operates in two segments: Hotel and Other. Its Other segment consists of three operating segments, which include its vacation rentals, restaurants and attractions businesses. The Company’s branded Websites include tripadvisor.com in the United States and localized versions of the TripAdvisor Website in 45 other countries, including China under the brand, daodao.com and are offered in 28 languages. It features reviews and opinions on accommodations, including hotels and accommodations and vacation rentals, as well as restaurants and attractions in approximately 147,000 destinations throughout the world. In addition to user-generated content, its Websites feature price comparison tools and links to partner Websites, including travel advertisers, where users can book their travel arrangements.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of TRIP – August 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg 1.51
MG Growth Estimate 15.00%
MG Value $58.11
Opinion Overvalued
MG Value based on 3% Growth $21.89
MG Value based on 0% Growth $12.83
Market Implied Growth Rate 19.16%
Current Price $70.68
% of Intrinsic Value 121.63%

Tripadvisor stock (TRIP) qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, lack of dividend payments, the short history as a publicly traded company and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned with the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.72 in 2011 to an estimated $1.51 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 19.16% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tripadvisor stock (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

TRIP charts August 2015

Net Current Asset Value (NCAV) -$0.16
PEmg 46.83
Current Ratio 1.94
PB Ratio 8.32
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

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ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Total Current Assets $1,012,000,000
Total Current Liabilities $522,000,000
Long-Term Debt $287,000,000
Total Assets $2,277,000,000
Intangible Assets $942,000,000
Total Liabilities $1,036,000,000
Shares Outstanding (Diluted Average) 146,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.63
Dec14 $1.55
Dec13 $1.41
Dec12 $1.37
Dec11 $1.32
Dec10 $1.04

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.51
Dec14 $1.41
Dec13 $1.24
Dec12 $1.02
Dec11 $0.72
Dec10 $0.35

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 5/23/15
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
28 Companies in the Spotlight This Week – 2/28/15
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP
26 Companies in the Spotlight This Week – 11/22/14

Other ModernGraham posts about related companies

Priceline Group Annual Valuation – 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP
Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP
Priceline Group Inc. Quarterly Valuation – February 2015 $PCLN
Tripadvisor Inc. Quarterly Valuation – November 2014 $TRIP
Priceline.com Inc. Quarterly Valuation – November 2014 $PCLN
Expedia Inc. Annual Stock Valuation – 2014 $EXPE
Tripadvisor Inc. Quarterly Valuation – August 2014 $TRIP
Priceline Group Quarterly Valuation – July 2014 $PCLN
The Priceline Group (PCLN) Quarterly Valuation – April 2014

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.

Tripadvisor Inc. Quarterly Valuation – May 2015 $TRIP

220px-TripAdvisorBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tripadvisor Inc. (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. is an online travel company that enables users to have a planned trip. TripAdvisor features reviews and advice on destinations, accommodations (hotels, bed and breakfast, specialty lodging and vacation rentals), restaurants and activities. The Company also enables consumers to book hotels, vacation rentals, airline tickets, vacation packages, destination services and even cruises. TripAdvisor’s branded websites include http://www.tripadvisor.com for the United States, http://www.tripadvisor.com.ve for Venezuela, http://www.tripadvisor.com.pe for Peru, http://www.tripadvisor.cl for Chile, http://www.tripadvisor.co for Columbia, http://www.tripadvisor.com.eg for Egypt, http://www. tripadvisor.com.my for Malaysia, http://www.tripadvisor.tw for Taiwan, http://www.tripadvisor.com.ar for Argentina, http://www.tripadvisor.co.id for Indonesia, http://www.tripadvisor.gr for Greece, http://www.tripadvisor.ru for Russia and http://www.th.tripadvisor.com for Thailand.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $79.86
MG Value $59.12
MG Opinion Overvalued
Value Based on 3% Growth $24.06
Value Based on 0% Growth $14.10
Market Implied Growth Rate 19.81%
Net Current Asset Value (NCAV) -$0.14
PEmg 48.13
Current Ratio 1.98
PB Ratio 9.89

Balance Sheet – March 2015

Current Assets $894,000,000
Current Liabilities $452,000,000
Total Debt $250,000,000
Total Assets $2,094,000,000
Intangible Assets $916,000,000
Total Liabilities $915,000,000
Outstanding Shares 146,000,000

Earnings Per Share

2015 (estimate) $2.08
2014 $1.55
2013 $1.41
2012 $1.37
2011 $1.32
2010 $1.04
2009 $0.77
2008 $0.00
2007 $0.00
2006 $0.00
2005 $0.00

Earnings Per Share – ModernGraham

2015 (estimate) $1.66
2014 $1.41
2013 $1.29
2012 $1.12
2011 $0.87
2010 $0.55

Dividend History
Tripadvisor does not pay a dividend.

Conclusion:

Tripadvisor Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short history as a publicy traded company, along with the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.87 in 2011 to an estimated $1.66 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 19.81% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tripadvisor Inc. (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Tripadvisor Inc. Quarterly Valuation – February 2015 $TRIP

220px-TripAdvisorBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – February 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tripadvisor Inc. (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. is an online travel company that enables users to have a planned trip. TripAdvisor, Inc. features reviews and advice on destinations, accommodations, restaurants and activities. It also enables consumers to book hotels, vacation rentals, airline tickets, vacation packages, destination services and cruises. Its Websites include http://www.tripadvisor.com for the United States, http://www.tripadvisor.com.ve for Venezuela, http://www.tripadvisor.com.pe for Peru, http://www.tripadvisor.cl for Chile, http://www.tripadvisor.co for Columbia, http://www.tripadvisor.com.eg for Egypt, http://www. tripadvisor.com.my for Malaysia, http://www.tripadvisor.tw for Taiwan, http://www.tripadvisor.com.ar for Argentina, http://www.tripadvisor.gr for Greece, http://www.tripadvisor.ru for Russia and http://www.tripadvisor.co.id for Indonesia, among others. It owns Rove, a personal journal app that enables users log activities, including places they have visited and photos they have taken.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $88.78
MG Value $54.49
MG Opinion Overvalued
Value Based on 3% Growth $20.52
Value Based on 0% Growth $12.03
Market Implied Growth Rate 27.11%
Net Current Asset Value (NCAV) -$0.60
PEmg 62.73
Current Ratio 1.96
PB Ratio 11.52

Balance Sheet – December 2014

Current Assets $747,000,000
Current Liabilities $381,000,000
Total Debt $260,000,000
Total Assets $1,959,000,000
Intangible Assets $948,000,000
Total Liabilities $834,000,000
Outstanding Shares 146,000,000

Earnings Per Share

2014 $1.56
2013 $1.41
2012 $1.37
2011 $1.32
2010 $1.04
2009 $0.77
2008 $0.00
2007 $0.00
2006 $0.00
2005 $0.00

Earnings Per Share – ModernGraham

2014 $1.42
2013 $1.29
2012 $1.12
2011 $0.87
2010 $0.55
2009 $0.26

Dividend History
Tripadvisor Inc. does not pay a dividend.

Conclusion:

Tripadvisor Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short operating history as a public company, the lack of dividends along with the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.55 in 2010 to only $1.42 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 27.11% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Tripadvisor Inc. (TRIP) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tripadvisor Inc. (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Tripadvisor Inc. (TRIP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Tripadvisor Inc. Quarterly Valuation – November 2014 $TRIP

220px-TripAdvisorBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – November 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tripadvisor Inc. (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. (TripAdvisor) is an online travel research company, enabling users to plan and have a trip. TripAdvisor features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages and travel guides. TripAdvisor’s travel research platform features reviews and opinions from its community of travelers about destinations, accommodations (hotels, bed and breakfasts, specialty lodging and vacation rentals), restaurants and activities worldwide, through its TripAdvisor brand. TripAdvisor Websites include tripadvisor.com in the United States and versions of the Website in 30 countries, including in China under the brand daodao.com. In May 2014, the Company acquired Vacation Home Rentals, a Massachusetts-based vacation rentals Website. In May 2014, the Company acquired London-based Tripbod, travel community. In August 2014, the Company acquired Viator.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $71.45
MG Value $58.08
MG Opinion Overvalued
Value Based on 3% Growth $21.88
Value Based on 0% Growth $12.82
Market Implied Growth Rate 19.43%
Net Current Asset Value (NCAV) -$0.53
PEmg 47.36
Current Ratio 1.90
PB Ratio 9.61

Balance Sheet – September 2014

Current Assets $792,000,000
Current Liabilities $417,000,000
Total Debt $270,000,000
Total Assets $1,956,000,000
Intangible Assets $928,000,000
Total Liabilities $870,000,000
Outstanding Shares 146,000,000

Earnings Per Share

2014 (estimate) $1.84
2013 $1.41
2012 $1.37
2011 $1.32
2010 $1.04
2009 $0.77
2008 $0.00
2007 $0.00
2006 $0.00
2005 $0.00

Earnings Per Share – ModernGraham

2014 (estimate) $1.51
2013 $1.29
2012 $1.12
2011 $0.87
2010 $0.55
2009 $0.26

Dividend History
Tripadvisor does not pay a dividend.

Conclusion:

Tripadvisor is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, short earnings history, lack of dividends, and high PEmg and PB ratios, while the Enterprising Investor is only initially concerned with the lack of dividend payments.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overervalued after growing its EPSmg (normalized earnings) from $0.55 in 2010 to an estimated $1.51 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 19.43% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Tripadvisor Inc. (TRIP) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tripadvisor Inc. (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Tripadvisor Inc. (TRIP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Tripadvisor Inc. Quarterly Valuation – August 2014 $TRIP

220px-TripAdvisorBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Enterprising Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tripadvisor Inc. (TRIP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TripAdvisor, Inc. (TripAdvisor) is an online travel research company, enabling users to plan and have a trip. TripAdvisor features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages and travel guides. TripAdvisor’s travel research platform features reviews and opinions from its community of travelers about destinations, accommodations (hotels, bed and breakfasts, specialty lodging and vacation rentals), restaurants and activities worldwide, through its TripAdvisor brand. TripAdvisor Websites include tripadvisor.com in the United States and versions of the Website in 30 countries, including in China under the brand daodao.com. In May 2014, the Company acquired Vacation Home Rentals, a Massachusetts-based vacation rentals Website. In May 2014, the Company acquired London-based Tripbod, travel community. In August 2014, the Company acquired Viator.
TRIP Chart

TRIP data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $97.37
MG Value $55.65
MG Opinion Overvalued
Value Based on 3% Growth $20.96
Value Based on 0% Growth $12.29
Market Implied Growth Rate 29.43%
Net Current Asset Value (NCAV) $0.35
PEmg 67.37
Current Ratio 2.22
PB Ratio 13.55

Balance Sheet – 6/30/2014

Current Assets $855,000,000
Current Liabilities $386,000,000
Total Debt $280,000,000
Total Assets $1,831,000,000
Intangible Assets $720,000,000
Total Liabilities $805,000,000
Outstanding Shares 142,770,000

Earnings Per Share

2014 (estimate) $1.65
2013 $1.41
2012 $1.37
2011 $1.32
2010 $1.04
2009 $0.77

Earnings Per Share – ModernGraham

2014 (estimate) $1.45
2013 $1.29
2012 $1.12
2011 $0.87
2010 $0.55
2009 $0.26

Dividend History

Tripadvisor does not pay a dividend.

Conclusion:

Tripadvisor does not qualify for the Defensive Investor but does satisfy the Enterprising Investor.  The Defensive Investor is concerned by the short earnings history, lack of dividend payments, and high PEmg and PB ratios.  The Enterprising Investor’s only initial concern is the lack of dividend payments.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.55 in 2010 to an estimated $1.45 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 29.43% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tripadvisor Inc. (TRIP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Tripadvisor Inc. (TRIP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Expedia Group Inc Valuation – March 2019 #EXPE

Company Profile (excerpt from Reuters): Expedia Group, Inc., formerly Expedia, Inc., incorporated on April 18, 2005, is an online travel company. The Company operates through four segments: Core Online Travel Agencies (Core OTA), trivago, Egencia and HomeAway. It has created a global travel marketplace used by a range of leisure and corporate travelers, offline retail travel agents and travel service providers. The Company offers travel and non-travel advertisers access to a source of incremental traffic and transactions through its media and advertising offerings on its transaction-based Websites. The Company’s Core OTA segment provides a range of travel and advertising services to its customers across the world, through a range of brands, including Expedia.com and Hotels.com in the United States, and localized Expedia and Hotels.com Websites throughout the world, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Wotif Group, CarRentals.com and Classic Vacations. The Company’s trivago segment sends referrals to online travel companies and travel service providers from its hotel metasearch Websites. Its Egencia segment, which also includes Orbitz Worldwide (Orbitz) for Business, provides managed travel services to corporate customers across the world. The Company’s HomeAway segment operates an online marketplace for the vacation rental industry.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EXPE – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,501,820,260 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 32.73% Fail
6. Moderate PEmg Ratio PEmg < 20 32.96 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.37 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.81
MG Growth Estimate 1.23%
MG Value $41.76
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $55.29
MG Value based on 0% Growth $32.41
Market Implied Growth Rate 12.23%
Current Price $125.67
% of Intrinsic Value 300.94%

Expedia Group Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.53 in 2015 to an estimated $3.81 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Expedia Group Inc revealed the company was trading above its Graham Number of $61.37. The company pays a dividend of $1.24 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 32.96, which was below the industry average of 41.58, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-47.47.

Expedia Group Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.47
Graham Number $61.37
PEmg 32.96
Current Ratio 0.64
PB Ratio 3.37
Current Dividend $1.24
Dividend Yield 0.99%
Number of Consecutive Years of Dividend Growth 6

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $5,197,000,000
Total Current Liabilities $8,060,000,000
Long-Term Debt $3,717,000,000
Total Assets $18,033,000,000
Intangible Assets $10,112,000,000
Total Liabilities $12,382,000,000
Shares Outstanding (Diluted Average) 151,344,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.00
Dec2018 $2.65
Dec2017 $2.42
Dec2016 $1.82
Dec2015 $5.70
Dec2014 $2.99
Dec2013 $1.67
Dec2012 $2.00
Dec2011 $3.41
Dec2010 $2.93
Dec2009 $2.06
Dec2008 -$17.60
Dec2007 $1.88
Dec2006 $1.40
Dec2005 $1.30
Dec2004 $0.00
Dec2003 $0.66
Dec2002 $0.46
Dec2001 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.81
Dec2018 $2.85
Dec2017 $2.94
Dec2016 $3.08
Dec2015 $3.53
Dec2014 $2.49
Dec2013 $2.30
Dec2012 $1.26
Dec2011 $0.11
Dec2010 -$1.65
Dec2009 -$3.36
Dec2008 -$4.91
Dec2007 $1.30
Dec2006 $0.93
Dec2005 $0.63
Dec2004 $0.28
Dec2003 $0.35

Recommended Reading:

Other ModernGraham posts about the company

Expedia Group Inc Valuation – May 2018 $EXPE
Expedia Inc Valuation – February 2017 $EXPE
Expedia Inc. Analysis – October 2015 Update $EXPE
17 Companies in the Spotlight This Week – 9/27/2014
Expedia Inc. Annual Stock Valuation – 2014 $EXPE

Other ModernGraham posts about related companies

Booking Holdings Inc Valuation – January 2019 $BKNG
TripAdvisor Inc Valuation – January 2019 $TRIP
ILG Inc Valuation – July 2018 $ILG
Royal Caribbean Cruises Ltd Valuation – Initial Coverage June 2018 $RCL
Expedia Group Inc Valuation – May 2018 $EXPE
Booking Holdings Inc Valuation – April 2018 $BKNG
TripAdviser Inc Valuation – March 2018 $TRIP
Expedia Inc Valuation – February 2017 $EXPE
Priceline Group Inc Valuation – July 2016 $PCLN
TripAdvisor Inc Valuation – June 2016 $TRIP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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