Company Overview: TripAdvisor, Inc. (NASDAQ: TRIP) is an online travel corporation that owns and maintains several travel-related websites. Hotels, Media & Platform, and Experiences & Dining are the company's two segments. On Tripadvisor-branded Websites, the Hotels, Media & Platform division engages in click-based advertising, generally comprising booking links to its travel partners' websites. It also offers subscription-based advertising for hotels, bed, and breakfast (B&B) owners, and other speciality accommodation properties. Consumers can study and book tours, events, and experiences in travel destinations directly through Viator, its dedicated Experiences offering, and on its Tripadvisor-branded Websites and mobile apps, according to the Experiences & Dining section.
Key Takeaways from Q1FY22 (ended March 31, 2022)
Revenues & Operating Profit Key Highlights; Analysis by Kalkine Group
Balance Sheet & Liquidity Position
Key Metrics: In Q1FY22, TRIP's operating and net margins were 7.6% and 13.0%, compared to 68.3% and 65.0%, reported in Q1FY21 respectively. ROE stood at 4.4% vs. the industry median of -0.1%.
Profitability Metrics; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 53.91% of the total shareholding, while the top 4 constitute the maximum holding. Mitac International Corp and Fidelity Management & Research Company LLC hold the maximum stake in the company at 12.97% and 9.74%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: Over the past nine months, TRIP's share price has corrected 27.87%. The stock is currently leaning towards the lower end of its 52-week range of USD 20.25 to USD 44.99. We have valued the stock using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with an upside of low-twenties (in percentage terms). We believe that the company is trading at premium with its peer's average, considering its improvement in monthly unique users and positive adjusted EBITDA. We have taken peers like Baidu, Inc. (NASDAQ: BIDU) and Zynga Inc. (NASDAQ: ZNGA). Considering the decent topline performance, growth in adjusted EBITDA margin, reduction in net losses, associated risks, and current valuation. We give a "Buy" recommendation on the stock at the closing price of USD 24.20, down 2.30% as of May 16, 2022.
TRIP Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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