Booking Holdings, Expedia, and MakeMyTrip
2020 has been one of the worst years for the travel industry, with the coronavirus pandemic forcing people to eschew ravel. Several countries around the world are now witnessing a second wave of COVID-19 and reactivating lockdowns. However, the arrival of vaccines has made investors optimistic about the industry’s recovery in 2021. This is making some travel stocks perform well currently. Some relaxation of travel restrictions and strong holiday-season travel demand are also adding steam to the rally.
A COVID-19 vaccine jointly developed by Pfizer Inc. (PFE) and BioNTech ((BNTX)) and one developed by Moderna Inc. (MRNA) have received regulatory approval for emergency use across most countries. Moreover, the UK. government has also approved the vaccine developed by Oxford University and AstraZenca ((AZN)). These vaccines are expected to be effective against a new, more contagious, strain of the virus also. As a result, people the world over are expected to now begin planning long-delayed vacations for next year and start making reservations online.
This backdrop has helped online travel stocks like Booking Holdings Inc. (BKNG), Expedia Group, Inc. (EXPE) and MakeMyTrip Limited (MMYT) deliver decent returns this year. The economic recovery, combined with these companies’ aggressive discounting policies, should help these stocks keep moving higher in the coming quarters.
Booking Holdings Inc. (BKNG)
BKNG is a provider of travel and restaurant online reservation related services worldwide. It services an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its brands namely, Booking.com, Priceline and Agoda.
On November 23 BKNG’s wholly owned subsidiary, Priceline, launched a new loyalty program called Priceline VIP to help frequent travelers save more money on their travels. The company also provided a few custom deals and discounts for travelers on Black Friday.
BKNG reported declining revenues in the third quarter ended September 30, 2020, due primarily to the COVID-19 related business slowdown. However, its revenues have increased 319% sequentially to $2.64 billion over the same period. Its non-GAAP EPS has increased 213.5% sequentially to $12.27.
Analysts expect BKNG’s revenues to rise 52.6% to $10.29 billion for the fiscal 2021. The consensus EPS estimate of $55.80 for the next year represents a 2,186.9% improvement from the year-ago value. BKNG has gained 37.2% over the past six months.
How does BKNG stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You cannot ask for better. The stock is also ranked #4 of 61 stocks in the Internet industry.
Expedia Group, Inc. (EXPE)
EXPE is an online travel company operating through four segments: Core Online Travel Agencies, Trivago, Vrbo, and Egencia. The company helps users book tickets for travel, hotel accommodation, and rental cars, and provides other travel related services.
In September, EXPE Group released new versions of the Brand Expedia, Hotwire and Vrbo iOS apps to take advantage of the capabilities available in iOS 14. This will allow travelers to unlock new ways to view the latest travel deals and easily access their reservation details.
EXPE has renewed its multi-year agreement with Mastercard (MA) this quarter. This is expected to increase the efficiency of EXPE’s payment platform.
EXPE’s revenues have increased 165.7% sequentially to $1504 million in the third quarter ended September 30. Its adjusted EBITDA has increased 169.7% from the prior quarter to $304 million, while net income improved 70.7% sequentially.
Analysts expect EXPE’s revenues to rise 46.1% to $7.92 billion next year. The consensus EPS estimate of $0.68 for the next year represents a 108.7% improvement from the year-ago value. The stock has gained 58.8% over the past six months.
It is no surprise that EXPE is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Industry Rank and a “B” in Peer Grade. It is ranked #13 in the same industry.
MakeMyTrip Limited (MMYT)
MMYT is an online travel company operating primarily in India through MakeMyTrip, Goibibo and RedBus brands. Its services and products include domestic and international air ticketing, accommodation bookings, holiday planning, rail ticketing, intercity bus ticketing, car hire and ancillary travel requirements.
MMYT’s revenues have increased 231% sequentially to $21.05 million in the fiscal second quarter ended September 30. Its adjusted operating profit improved 39.4% sequentially over the same period, while its EPS increased 37.5% from the prior quarter. The company’s gross bookings have increased 230.2% sequentially to 213 million over the same period.
Analysts expect MMYT’s revenues to rise 182.8% to $555.52 million for the next year ending March 31, 2021. The consensus EPS estimate for the current quarter ending December 31, 2020 represents a 20.7% improvement from the year-ago value. MMYT has gained 78.8% over the past year.
MMYT’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” in Trade Grade and Industry Rank and a “B” in Buy & Hold Grade and Peer Grade. It is ranked #24 in the same industry.
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BKNG shares were unchanged in after-hours trading Wednesday. Year-to-date, BKNG has gained 7.38%, versus a 17.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More…
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