Expedia's (EXPE) Q4 Earnings May Reflect Trivago Weakness

Expedia, Inc. (NASDAQ:EXPE) is set to report fourth-quarter 2017 results on Feb 8, after the bell. Last quarter, the company delivered a negative earnings surprise of 3.09%.

The surprise history has not been good in Expedia’s case. The company missed estimates in each of the trailing four quarters, with an average four-quarter negative surprise of 12.2%.

We observe that shares of Expedia have gained 1.1% in the past 12-months, significantly underperforming the industry’s 65.5% rally.

Core OTA

In the third quarter, this segment’s revenues increased 15.2% sequentially and 11.1% year over year to $2.3 billion. The slower-than-expected room night growth could hurt this segment. The Zacks Consensus Estimate for this segment’s revenue is currently pegged at $1.9 billion.

Trivago

Trivago revenues increased 3% sequentially and 22.5% year over year to $338 million. Its growth is expected to be impacted in the to-be-reported quarter primarily due to weak volumes and lower monetization. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at 213 million.

HomeAway

In the third quarter, HomeAway revenues were $305 million, increasing 36.2% sequentially and 45.2% year over year. HomeAway conversion rates are strong and have been increasing year over year. Consistent increase in stayed room night and stayed property night could slightly contribute to HomeAway’s growth. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $227 million.

Egencia

In the third quarter, Egencia was down 6.7% on a sequential basis but up 12.5% on a year-over-year basis to $126 million. It is expected to perform well in the to-be-reported quarter driven by the ramp up of Egencia's sales force and increased client acquisitions. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $133 million.

What Our Model Says

Expedia has a Zacks Rank #3 (Hold) and an Earnings ESP of -1.89%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided especially if they have a negative Earnings ESP.

Expedia, Inc. Price and EPS Surprise

Expedia, Inc. Price and EPS Surprise | Expedia, Inc. Quote

Stocks to Consider

Here are a few stocks that you may consider as our model shows these have the right combination of elements to deliver a positive earnings surprise:

Applied Materials, Inc. (NASDAQ:AMAT) , with an Earnings ESP of +0.57% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Energy Industries, Inc. (NASDAQ:AEIS) , with an Earnings ESP of +3.77% and a Zacks Rank #2.

Advanced Micro Devices, Inc. (NASDAQ:AMD) , with an Earnings ESP of +8.72% and a Zacks Rank #3.

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