Tripadvisor (TRIP) Has Right Mix to Take-Off...and Soon - Barron's
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Tripadvisor (Nasdaq: TRIP) shares are moving higher Wednesday following a bullish report in Barron's late Tuesday night.
The site dedicated to making traveling easier sees 50 million reviews per month on over 500,000 hotels and 160,000 attractions. It's basically the hub for those looking for advice on where to go, why, how to get there, where to stay, and what to do one there.
Currently, the company has a market cap of about $4 billion, though valuation is still relatively cheap according to some bulls. At 18 times expected 2012 earnings, that's a discount to the 23 times peers in the Internet group are going for. Tripadvisor is growing at about 16 percent, and revenue is already expected to rise 23 percent next year.
It's also been one of the better IPO stories of 2011. After spinning off of former parent Expedia (Nasdaq: EXPE) and debuting at $30, shares are currently up 16 percent to nearly $35 per share. Another benefit of the spin-off is more immediate business. Barron's noted while Tripadvisor has a great service going, companies like Orbitz (NYSE: OWW) and Priceline.com (Nasdaq: PCLN) were previously hesitant to use the services for fear customers would then move to Expedia.
While Expedia still accounts for about 33 percent of Tripadvisor's revs, the arms-length relationship puts potential customers at ease.
Generating cash is also the name of the game and with Tripadivsor's high margins, achieving that isn't a problem. Barron's believes Tripadvisor can capture about 50 percent of its margins, and should grow the top-line by 30 percent given international expansion opportunities, comps growth, and new revenue streams.
There's also the stickiness of the site. Those users actually planning a vacation might spend as much as 200 minutes per month on the site. That amount makes it easier for Tripadvisor to monetize opportunities.
Barron's however, warned of the great white shark in the internet sector: Google (Nasdaq: GOOG). The company seems to have noticed all the fun Tripadvisor has been having and didn't feel like being left out in the rain. Though Google made a stronger push last year with it's Google Places feature, it has since backed-off a bit with the pending acquisition of Motorola Mobility (NYSE: MMI) and some other flags being raised.
While competition will affect any successful company, investors looking to add some lift to their portfolios might want to consider Tripadvisor. Shares are up about 6 percent Wednesday afternoon.
The site dedicated to making traveling easier sees 50 million reviews per month on over 500,000 hotels and 160,000 attractions. It's basically the hub for those looking for advice on where to go, why, how to get there, where to stay, and what to do one there.
Currently, the company has a market cap of about $4 billion, though valuation is still relatively cheap according to some bulls. At 18 times expected 2012 earnings, that's a discount to the 23 times peers in the Internet group are going for. Tripadvisor is growing at about 16 percent, and revenue is already expected to rise 23 percent next year.
It's also been one of the better IPO stories of 2011. After spinning off of former parent Expedia (Nasdaq: EXPE) and debuting at $30, shares are currently up 16 percent to nearly $35 per share. Another benefit of the spin-off is more immediate business. Barron's noted while Tripadvisor has a great service going, companies like Orbitz (NYSE: OWW) and Priceline.com (Nasdaq: PCLN) were previously hesitant to use the services for fear customers would then move to Expedia.
While Expedia still accounts for about 33 percent of Tripadvisor's revs, the arms-length relationship puts potential customers at ease.
Generating cash is also the name of the game and with Tripadivsor's high margins, achieving that isn't a problem. Barron's believes Tripadvisor can capture about 50 percent of its margins, and should grow the top-line by 30 percent given international expansion opportunities, comps growth, and new revenue streams.
There's also the stickiness of the site. Those users actually planning a vacation might spend as much as 200 minutes per month on the site. That amount makes it easier for Tripadvisor to monetize opportunities.
Barron's however, warned of the great white shark in the internet sector: Google (Nasdaq: GOOG). The company seems to have noticed all the fun Tripadvisor has been having and didn't feel like being left out in the rain. Though Google made a stronger push last year with it's Google Places feature, it has since backed-off a bit with the pending acquisition of Motorola Mobility (NYSE: MMI) and some other flags being raised.
While competition will affect any successful company, investors looking to add some lift to their portfolios might want to consider Tripadvisor. Shares are up about 6 percent Wednesday afternoon.
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