China-based travel services company Trip.com Group Limited (NASDAQ: TCOM) offers a broad portfolio of services, including hotel accommodations, transportation ticketing, packaged tours, corporate travel management, property management systems, and advertising.
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Recently, Trip.com posted better-than-expected results in the first quarter of 2022, beating both earnings and revenue expectations, as indicated by TipRanks’ Website Visits tool.
Strong overseas travel demand, mainly across Europe and the Asia Pacific, recorded elevated bookings on the website, which drove the Q1 performance. However, the COVID-19 resurgence in China negatively impacted results.
Following the update, shares of the company rose almost 17% in pre-market trading at the time of writing.
Website Traffic
The earnings results were evident on TipRanks’ new tool that measures visits to Trip.com’s website. Pre-earnings, we were able to see insights into Trip.com’s performance in the first quarter.
According to the tool, a website traffic uptrend was visible. In Q1 2022, total visits to the Trip.com website showed a rising trend, on a global basis, representing an 11.56% surge from the fourth quarter and a whopping 79.21% jump on a year-over-year basis. This, in turn, indicated that the company might beat analysts’ expectations in the first quarter.
The predictions that were based on TipRanks’ website visit data matched reported results, with Trip.com reporting upbeat results in Q1 2022.
Results in Detail
Trip.com reported an adjusted loss per ADS of RMB 0.06 ($0.01) in the first quarter, compared with an adjusted loss of RMB 0.34 per share in the prior-year quarter. Analysts estimated a loss of $0.08 per ADS.
Net revenue stood at RMB 4.1 billion ($649 million), flat on a year-over-year basis, but topped analysts’ expectations of $575.04 million. Interestingly, staycation travel majorly contributed to the Chinese domestic market recovery, reflecting a rise of 20% in local hotel bookings. Also, global air-ticket bookings surged by more than 270%, driven by the recovery in European and Asian Pacific markets.
On a year-over-year basis, Accommodation reservation revenue, Packaged-tour revenue, and Corporate travel revenue slumped 8%, 27%, and 12%, respectively, on rising COVID-related disruptions in China.
However, Transportation ticketing revenue rose 10% year-over-year on the back of a strong air travel rebound in the overseas market.
Adjusted EBITDA margin came in at 2%, compared with a negative 5% in the prior-year quarter.
CEO’s Comments
Trip.com CEO Jane Sun commented, “Though it was challenging for domestic travel due to the COVID-19 resurgence in China during the first quarter, our results demonstrated our resilience amidst a confluence of challenges and uncertainties. While we may continue to see short-term fluctuations, demand for travel is still strong and shows a bright outlook in the long-term.”
Wall Street’s Take
Consensus among analysts is a Strong Buy based on four Buys and one Hold. The average Trip.com price target of $28.20 implies 14.77% upside potential from current levels. Shares have gained 5.5% over the past six months.
Hedge Funds
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Trip.com is currently Very Positive, as some of the top hedge funds that were active in the last quarter increased their cumulative holdings by 2.7 million shares.
Interestingly, American billionaire investor and hedge fund manager Raymond Thomas Dalio of the world’s largest hedge fund, Bridgewater Associates, increased its holding in Trip.com by 54%.
Bottom-Line
Amid the macro uncertainty and disruptions in China, Trip.com turned triumphant with a strong recovery in travel demand. This indicates long-term prospects as COVID-related restrictions are easing out. As a result, based on analysts’ bullish stance, strong price performance, and hedge funds’ positive confidence signal, investing in the stock is likely to be a prudent decision.
Also, eyeing website trends indicated by TipRanks’ Website Traffic Tool could be productive for investors to reap potential gains.
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