Earnings Preview: Expedia to report 1Q as gas prices soar
NEW YORK—Expedia Inc., which operates the Internet travel site Expedia.com, reports first-quarter earnings on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: During the quarter ended March 31, Bellevue, Wash.-based Expedia expanded its international operations and acquired more online properties.
In March, Expedia said it launched Expedia.co.in, which is geared toward Indian travelers. It is the company's 17th branded site.
Also that month, Expedia said it acquired online car rental site CarRentals.com for an undisclosed amount.
In February, TripAdvisor LLC, a unit of Expedia, said it purchased U.K. travel Web site Holiday Watchdog for an undisclosed amount.
Also during the quarter, Expedia and its peers weathered general economic weakness and record fuel prices that are hurting the airline industry.
BY THE NUMBERS: Analysts polled by Thomson Financial expect earnings of 23 cents per share on $655.7 million in revenue. Analyst estimates typically exclude one-time items.
ANALYST TAKE: In a recent investor note, Stifel Nicolaus & Co. analyst George Askew reiterated his "Hold" rating for the stock, predicting the company will report first-quarter adjusted earnings of 23 cents per share on revenue of $657.6 million.
Askew said an early Easter holiday and relatively early domestic spring break season "likely helped first-quarter bookings at the expense of (second-quarter) bookings."
He noted that domestic airfares have continued rising "at a record pace" and thinks general economic weakness and high gas prices have hurt travel trends in the U.S.
Still, "We believe international markets, which comprise 35 percent of Expedia's bookings, have held up better than domestic markets," he said.
WHAT'S AHEAD: Investors will be keeping an eye on how the recent shutdown of operations at several airlines and the merger between Delta Air Lines Inc. and Northwest Airlines Corp. -- which was agreed upon in mid-April -- will impact Expedia and other online travel companies.
Analysts have expressed concerns that mergers could hurt companies like Expedia in a variety of ways, such as lowering demand for their services.
STOCK PERFORMANCE: Shares of Expedia, which have traded between $20.18 and $35.28 over the past year, fell almost 31 percent during the quarter. They finished trading Tuesday at $25.04.
