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Expedia Inc (EXPE), Priceline.com Inc (PCLN): How Does This Internet Travel Company Measure Up?

Would you like to enjoy a luxurious vacation on the beach? Find an affordable seven-night cruise in Alaska? Plan an itinerary for your European adventure? If so, then Expedia Inc (NASDAQ:EXPE) might be your best option. However, this doesn’t mean Expedia is the best investment option compared to its peers.

Expedia Inc (NASDAQ:EXPE)

As many investors already know, Priceline.com Inc (NASDAQ:PCLN) has been the biggest winner for Internet travel companies over the years. But does that mean it’s the best investment going forward? And what about Tripadvisor Inc (NASDAQ:TRIP)? TripAdvisor has outperformed Expedia and Priceline recently.


EXPE Chart

EXPE data by YCharts

Which site has the best traffic?

According to Alexa.com, TripAdvisor has the most traffic.

Global Rank U.S. Rank
Expedia 523 121
Priceline 775 148
TripAdvisor 238 91

The numbers above should indicate that TripAdvisor has the most potential, but numbers can deceiving. TripAdvisor is the most popular site because travelers leave reviews about their experiences, and because potential travelers read those reviews for information prior to booking a vacation.

However, a site that’s best known for travel reviews isn’t going to have the most revenue potential. Plus, TripAdvisor isn’t the best at keeping its visitors on the page — a key factor for revenue potential.

Pageviews-Per-User Time-On-Site Bounce Rate
Expedia 4.31 5:11 34.50%
Priceline 6.32 5:43 15%
TripAdvisor 4.16 4:18 40.8%

As you can see in the chart above, Priceline.com Inc (NASDAQ:PCLN) dominates in every category. Visitors view more pages, stay on-site longer, and they rarely visit one page and leave. The bounce rate indicates only one pageview per visit. Therefore, you always want to look for a low bounce rate when looking at website analytics.

Other important numbers

Expedia Inc (NASDAQ:EXPE) has a short position of 8.80%. The short interest is high for several reasons:

  1. The stock is currently trading at a lofty 45 times earnings.
  2. The first quarter disappointed
  3. Guidance is weak.
  4. The consumer isn’t gaining strength, which puts a lot of pressure of the travel industry.

Priceline.com Inc (NASDAQ:PCLN) and TripAdvisor are also dealing with an unsure economic environment. However, only TripAdvisor has a similar valuation to Expedia Inc (NASDAQ:EXPE), currently trading at 44 times earnings. Priceline isn’t cheap at 28 times earnings, but it offers the most consistent growth. Priceline’s revenue and earnings have consistently improved on an annual basis, and massive profits have become commonplace.

Company culture and leadership should also come into play when making an investment decision. According to Glassdoor.com, Expedia Inc (NASDAQ:EXPE) employees have rated their employer a 3.3 of 5, and 65% of employees would recommend the company to a friend. Leadership is above average as 74% of employees approve of CEO Dara Khosrowshahi.

While those numbers are decent, Priceline employees have rated their employer a 4.1 of 5, 85% of employees would recommend the company to a friend, and 92% of employees approve of CEO Jeff Boyd.

TripAdvisor’s company culture and leadership are stronger than Expedia Inc (NASDAQ:EXPE)’s, but not nearly as strong as Priceline’s. TripAdvisor employees have rated their employer a 3.7 of 5, 70% of employees would recommend the company to a friend, and 85% of employees approve of CEO Stephen Kaufer.

Conclusion

Priceline.com Inc (NASDAQ:PCLN) wins in website traffic, growth consistency, valuation, company culture, and leadership. That said, none of these companies are likely to hold up well if the stock market suffers a steep correction.

While Main Street consumers have been suffering for years, investments have paid off handsomely for higher-end earners with risk tolerance. This has led to a massive amount of discretionary income for these higher-end earners. If this wealth disappears as a result of reduced monetary stimulus and/or rising interest rates, then those trips to the Bahamas and Hawaii will come to a quick halt.

However, for those who believe in the economic turnaround and want exposure to the space, Priceline looks to be the best and safest option.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Priceline.com and TripAdvisor. The Motley Fool owns shares of Priceline.com and TripAdvisor.

The article How Does This Internet Travel Company Measure Up? originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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