What a time it’s been for Expedia. In the past six months alone, the company’s stock price has increased by a massive 69.5%, reaching $186.59 per share. This performance may have investors wondering how to approach the situation.

Is now still a good time to buy EXPE? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Does Expedia Spark Debate?

Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world’s leading online travel agencies.

Two Things to Like:

1. Room Nights Booked Skyrocket, Fueling Growth Opportunities

As an online travel company, Expedia generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.

Over the last two years, Expedia’s room nights booked, a key performance metric for the company, increased by 11.9% annually to 97.4 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings.

2. Long-Term EPS Growth Is Outstanding

We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Expedia’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.

One Reason to be Careful:

Customer Spending Decreases, Engagement Falling?

Average revenue per booking (ARPB) is a critical metric to track for consumer internet businesses like Expedia because it not only measures how much users book on its platform but also the commission that Expedia can charge.

Expedia’s ARPB fell over the last two years, averaging 2.2% annual declines. This isn’t great, but the increase in room nights booked is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Expedia tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether bookings can continue growing at the current pace.

Final Judgment

Expedia’s positive characteristics outweigh the negatives, and after the recent surge, the stock trades at 8.3x forward EV-to-EBITDA (or $186.59 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Expedia

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