We expect online travel company
) to beat expectations when it reports fourth quarter 2012
results on Feb 5.
Why a Likely Positive Surprise?
Our proven model shows that Expedia is likely to beat earnings
because it has the right combination of two key ingredients.
: The Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +3.64%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold):
Note that stocks with a Zacks Rank #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. The
sell-rated stocks (Zacks Rank #4 and #5) should never be
considered going into an earnings announcement.
The combination of Expedia's Zacks Rank #3 (Hold) and an ESP
+3.64% makes us reasonably confident in looking for a positive
earnings beat on Feb 5.
What is Driving the Better-Than-Expected Earnings?
Expedia's impressive business strategy, a stronger travel
market all over the world, contribution from VIA (acquired in
April 2012), strength in the company's hotel business and
strategic expansion in Asia are expected to drive results in the
We see potential for strong bookings and accelerated share
gains on the company's recent acquisitions and agreements that
will likely expand its addressable market. The company is taking
measures to expand in the Asia/Pacific region, which is likely to
remain one of the strongest drivers of the company's business
over the next few quarters, particularly since online penetration
in many Asia/Pacific markets remains relatively low.
As the shift from offline channels continues, with consumers
preferring to use the Internet for making travel plans, Expedia
will continue to see opportunities in the online travel market.
The positive trend is seen in the trailing four-quarter average
surprise of 64.97%. We expect Expedia to continue on the growth
Other Stocks to Consider
Expedia is not the only firm looking up this earnings season.
We also see likely earnings beats coming from these
), a Zacks Rank #2 (Buy) with an ESP of +350.0%.
Geospace Tec. Corp.
), a Zacks Rank #2 (Buy) with an ESP of +16.95%.
), a Zacks Rank #2 (Buy) with an ESP of +15.79%.
AUTODESK INC (ADSK): Free Stock Analysis
EXPEDIA INC (EXPE): Free Stock Analysis
GEOSPACE TEC CP (GEOS): Free Stock Analysis
INTERDIGITL INC (IDCC): Free Stock Analysis
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