Travelzoo Inc. (TZOO), Expedia Inc (EXPE), Tripadvisor Inc (TRIP): This Online Travel Stock Looks out of Gas

Valuation

Travelzoo Inc. (NASDAQ:TZOO) is trading at 21.5 times forward P/E and 2.87 times its price to sales. Expedia Inc (NASDAQ:EXPE) trades at 16.8 forward P/E and 2.05 P/S. Tripadvisor Inc (NASDAQ:TRIP)’s capitalization has gone ahead of its revenue, and the firm is trading at 10.83 times sales. If judged by forward P/E, the company is the most expensive, trading at 32.28 times. Among these stocks, only Expedia pays dividends, and it yields 0.82%.

Travelzoo has no debt on its balance sheet. This is not the case with Expedia Inc (NASDAQ:EXPE), which has $1.25 billion of long-term debt. The company’s debt-to-equity ratio is 0.58, a relatively high one. Tripadvisor Inc (NASDAQ:TRIP) is not debt-free either, having a 0.49 debt-to-equity ratio. However, the debt load does not seem to put any pressure on the valuation of any of those shares.

Bottom line

Travelzoo Inc. (NASDAQ:TZOO) shares look elevated and pose a risk of correction. The company must provide better growth of its subscription base. Otherwise, the pace of the stock appreciation is not sustainable. Travelzoo must enhance its mobile presence, or it could be unable to grow beyond the small company it is now.

Expedia Inc (NASDAQ:EXPE) is struggling to post meaningful growth and is likely to stay where it is now until it publishes its quarterly report. It does not look like a growth story at the moment.

Tripadvisor Inc (NASDAQ:TRIP) is trading at a premium due to its lead in mobile, which is a hot topic nowadays. The company must show how it extracts more value from the mobile user before the stock could continue its way upward. After the recent surge in price, it looks overvalued to me.

The article This Online Travel Stock Looks out of Gas originally appeared on Fool.com and is written by Vladimir Zernov.

Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends TripAdvisor. The Motley Fool owns shares of TripAdvisor. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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