It has been about a month since the last earnings report for TripAdvisor (TRIP). Shares have added about 5.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TripAdvisor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TripAdvisor (TRIP) Tops Q2 Earnings Estimates, Lags Revenues
TripAdvisor reported adjusted second-quarter 2018 earnings of 41 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. Also, earnings increased 37% sequentially and 8% from the year-ago quarter.
However, revenues in the second quarter were $433 million, lagging the Zacks Consensus Estimate of $436.1 million.
TripAdvisor's quarterly revenues reflect an increase of 14.6% sequentially and 2.1% year over year.
TripAdvisor reports revenues under two segments: Hotel and Other.
Revenues of $313 million from the Hotel segment decreased 4% from the year-ago quarter but contributed 73% of the total revenues. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise, also including sales from the company's largest subsidiary, SmarterTravel, as well as from operations in China.
Revenues of $120 million from the Non-Hotel segment increased 22% year over year and contributed the remaining 27% of the total revenues. This segment includes revenues from attractions, restaurants and vacation rental businesses.
Revenues by Source
Revenues of $199 million from Click-based advertising decreased 7% from the year-ago quarter and accounted for 46% of the total revenues. Revenues from Display-based advertising increased 8% year over year to $80 million and brought home 18% of the total revenues. The other hotel revenue component contributed $34 million, down 11% from the year-ago quarter. However, it accounted for 17% of the total revenues.
User reviews and opinions reached 661 in the quarter and grew 24% year over year.
Average monthly unique visitors grew 10% from the prior-year quarter to approximately 456 million.
Average monthly unique hotel shoppers decreased 3% year over year to approximately 149 million.
TripAdvisor's adjusted operating expenses of $331 million were flat from the year-ago quarter. Per the press release, operating margin of 11.3% was up 50 bps from the year ago-quarter.
On a GAAP basis, TripAdvisor's net income was $32 million or 23 cents per share compared with net profit of $27 million or earnings of 19 cents per share.
Balance Sheet & Cash Flow
TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $678 million, up from $650 million recorded in the last reported quarter. Accounts receivables were $300 million, up from $281 million in the first quarter.
Cash flow from operations was $186 million, increasing from $174 million in the last reported quarter. Capex was $16 million, up from $15 million in the first quarter. Free cash flow was 170 million, down from $204 million in the last reported quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.65% due to these changes.
Currently, TripAdvisor has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks style scores indicate that the company's stock is suitable for growth and momentum investors.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, TripAdvisor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.