Expedia (EXPE-Q)

Recent purchase. It's down 24% from recent highs, so it was an attractive entry point. Global travel demand remains resilient; higher than pre-pandemic, and holding steady. Consumer remains resilient. Lots of brands allows it to server diverse customer segments. Improved digital platform. Strong cashflow. Yield is 1.0%.

Interestingly, remote work trend allows people to work from...wherever. Earnings growth rate is ~19%, paying only 11x forward earnings, so a pretty good PEG ratio.

BOOK decided to be an agent only, so they take a commission on every transaction. Operating margins of 30%. Investors like the capital-light model, giving it a higher multiple between high 20s or almost 30x PE. Today though, PE in low 20s.

EXPE buys hotel rooms in bulk and then resells them; takes more risk and more capital. Operating margins of 10%. PE usually around 20x. PE today is in low teens. Though not as good a business, valuation discount is excessive. Better risk/reward.

It's missed earnings 3 times this year, but the shares have recovered each time. They can't establish any fundamental or technical momentum, and difficult comps lie ahead. 

Airlines in general have high debt levels, economic risk, sensitivity to the consumer, fuel price volatility. In the travel space, he'd rather own a BKNG or EXPE, where there are no capital costs. Or even a cruise line, which has demographics behind it.

Very competitive marketplace. Down today on overwhelming concern about consumer spending and prospects for travel for the next 12 months. BKNG is better positioned than EXPE, because Expedia's multiple brands cause confusion.

Generative AI is a concern for the future, as it may circumvent the go-between status of BKNG and EXPE and provide a personalized travel experience.

Expedia was down 16% in May after reporting a bad quarter, caused by poor consumer demand in the US and a multi-day outage in their home rental platform.

Company has had recent run up in price however does not score high on fundamentals (3/10). Has fairly strong brand, but better options out there for investors. If recession occurs, not a good business(travel expenses cut first). 

It's up 43% in November so far. He added it before that move, so he's glad. They benefit from having less activity in the Middle East than Booking Holdings. 

Though expectations were low, they just delivered excellent numbers. Gross booking slightly missed, but revenue and adjusted EPS beat, and this was largely due to their share buyback of $1.8 billion in the first 9 months of this year. They will buy back another $5 billion, too. They will amount o a third of their shares. Also, they reiterated guidance for double-digit topline growth. Investments in their loyalty program are working. Trades at a low 9x 2024 PE though he doesn't understand why it's so low.

Is popping 18% today after reporting. Expectations were very low. What's good is their geographic exposure, not that exposed to the Middle East which is effected by war now. Rather, Expedia is more focused domestically. The $5 billion share buyback was strong and will continued. Margins are wide, too.

Are buying back 8.5% of its shares this year, but also investing in their business for the long term. This shows confidence.  Also, he likes their new rewards program which operates across several of its businesses. Also, its trades at under 9x 2024's PE, half that of competitor Booking Holdings.

In line with cyclicals and discretionary areas, should see signs of improvement. Things are getting less worse. Sideways trading range. Travel is starting to turn up. 

Easy way to limit risk is near recent lows around $90, and wait for an upside breakout. Next target levels are $105 and $120. If it goes below $90 take off the position, as the market is always right.

Likes the CEO. Was impressed with Bookings' latest quarter, while Airbnb stock is still rising.