We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Forget Expedia, Invest in These 4 Internet Stocks Instead
Read MoreHide Full Article
Online travel booking company Expedia (EXPE - Free Report) seems to be in troubled waters. In the last reported quarter, the company disappointed with its earnings results. Also, it carries a Zacks Rank #5 (Strong Sell), with a weak earnings history.
What Happened Last Quarter
The company reported disappointing fourth-quarter earnings of 97 cents per share which missed the Zacks Consensus Estimate of $1.11. This was because the company increased its expenditure on acquisitions.
Expedia has embarked on a large number of acquisitions to strengthen its position in the domestic market and expand internationally. But while this has increased its top line, it has brought on board a variety of different businesses that have to be integrated into its core. Moreover, these businesses require separate marketing and promotion costs, which could be a reason why these costs are rising exponentially.
The company’s quarterly revenues fell 18.9% sequentially to $2.09 billion.However, revenues were up 23.3% year over year and ahead of the Zacks Consensus Estimate of $2.07 billion. Also, gross bookings decreased 13.4% sequentially.
Weak Outlook for the Upcoming Quarter
Expedia expects revenue and profitability to be negatively impacted, as Easter has shifted to the second quarter this year. The company expects pressure on margin early this year due to investments in selling & marketing ahead of the travel season.
In terms of technology & content expense, Expedia expects spending to increase a shade faster than revenues in the upcoming quarter. Also, for 2017, the company expects additional spending to be largely offset by lower infrastructure CapEx requirements.
Downward Earnings Revisions
Right now, Expedia’s earnings picture doesn’t look good. In the last 60 days, three out of five analysts revised their earnings estimates downward for the current quarter. The Zacks Consensus Estimate for this quarter also shrank considerably in the last 30 days, deteriorating from a loss of 22 cents to a loss of 27 cents.
Also, Expedia missed our earnings consensus estimate twice in the last four quarters.
Coming to the price performance, over the past one year, shares of Expedia underperformed the Zacks categorized Electronic Commerce industry. While the industry gained 38.34%, the stock returned 20.26%.
Turnaround Efforts
However, Expedia is not sitting on its hands. To counter the current market conditions, management is refocusing on operational formula, expansion of supply portfolio, optimization of marketing channels globally and growth of repeat user base.
These measures might seem impressive initially but could take some time before yielding results. As of now, it is advisable to steer clear of Expedia.
4 Internet Stocks to Consider
Understandably, there is nothing that boosts confidence in Expedia's stock right now. Nevertheless, the technology sector still has a few promising stocks to offer.
This is where our Zacks proprietary methodology comes in handy. Our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 emerge as good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
By using our screener, we bring forth four such stocks:
MeetMe Inc. owns and operates a social network. The company enables users to meet new people through social games and apps, monetized by both advertising and virtual currency. MeetMe carries a Zacks Rank #2 (Buy) and has a VGM score of A. Shares of this company have increased nearly 15.8% year to date. Moreover, its long-term EPS growth rate is a whopping 20%.
Also, the stock has a forward P/E of 11.9x, which is a lot lower than the industry average of 23.8x.
Alphabet (GOOGL - Free Report) is one of the leading providers of target-based advertisements on the web.Revenues come from ads served alongside, with the company’s page ranking and text-matching technology and infrastructure facilitating the process.
This Mountain View, California-based company has a Zacks Rank #2 and a VGM score of B. Shares have increased nearly 11.8% in the last one year. Moreover, it has a long-term EPS growth rate of 16.25%.
Bazaarvoice, Inc. (BV - Free Report) provides social commerce solutions through Bazaarvoice, a Software-as-a-Service platform that enables clients to capture, display, and analyze online word of mouth.
This company has a Zacks Rank #2 and a VGM score of B. Shares have increased nearly 38.10% in the last one year. Also, the company has a decent history of earnings beats. Bazaarvoice surpassed the Zacks Consensus Estimate thrice in the last four quarters, averaging a positive surprise of 52.58%.
VeriSign (VRSN - Free Report) provides Internet infrastructure services that include domain name registry services and infrastructure assurance services. It is well positioned to benefit from strong growth in both developed and emerging economies. VeriSign carries a Zacks Rank #2 and has a VGM score of B. Shares of this company have increased nearly 14.60% year to date.
Also, the stock has a forward P/E of 24.4x, which is slightly lower than the industry average of 24.5x.
These stocks have managed to grab the spotlight with their remarkable performances, supported by solid earnings results and strong growth projections. Keeping this in mind, we believe parking your money in these stocks would yield high returns in the short term.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Forget Expedia, Invest in These 4 Internet Stocks Instead
Online travel booking company Expedia (EXPE - Free Report) seems to be in troubled waters. In the last reported quarter, the company disappointed with its earnings results. Also, it carries a Zacks Rank #5 (Strong Sell), with a weak earnings history.
What Happened Last Quarter
The company reported disappointing fourth-quarter earnings of 97 cents per share which missed the Zacks Consensus Estimate of $1.11. This was because the company increased its expenditure on acquisitions.
Expedia has embarked on a large number of acquisitions to strengthen its position in the domestic market and expand internationally. But while this has increased its top line, it has brought on board a variety of different businesses that have to be integrated into its core. Moreover, these businesses require separate marketing and promotion costs, which could be a reason why these costs are rising exponentially.
The company’s quarterly revenues fell 18.9% sequentially to $2.09 billion.However, revenues were up 23.3% year over year and ahead of the Zacks Consensus Estimate of $2.07 billion. Also, gross bookings decreased 13.4% sequentially.
Weak Outlook for the Upcoming Quarter
Expedia expects revenue and profitability to be negatively impacted, as Easter has shifted to the second quarter this year. The company expects pressure on margin early this year due to investments in selling & marketing ahead of the travel season.
In terms of technology & content expense, Expedia expects spending to increase a shade faster than revenues in the upcoming quarter. Also, for 2017, the company expects additional spending to be largely offset by lower infrastructure CapEx requirements.
Downward Earnings Revisions
Right now, Expedia’s earnings picture doesn’t look good. In the last 60 days, three out of five analysts revised their earnings estimates downward for the current quarter. The Zacks Consensus Estimate for this quarter also shrank considerably in the last 30 days, deteriorating from a loss of 22 cents to a loss of 27 cents.
Also, Expedia missed our earnings consensus estimate twice in the last four quarters.
Coming to the price performance, over the past one year, shares of Expedia underperformed the Zacks categorized Electronic Commerce industry. While the industry gained 38.34%, the stock returned 20.26%.
Turnaround Efforts
However, Expedia is not sitting on its hands. To counter the current market conditions, management is refocusing on operational formula, expansion of supply portfolio, optimization of marketing channels globally and growth of repeat user base.
These measures might seem impressive initially but could take some time before yielding results. As of now, it is advisable to steer clear of Expedia.
4 Internet Stocks to Consider
Understandably, there is nothing that boosts confidence in Expedia's stock right now. Nevertheless, the technology sector still has a few promising stocks to offer.
This is where our Zacks proprietary methodology comes in handy. Our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 emerge as good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
By using our screener, we bring forth four such stocks:
MeetMe Inc. owns and operates a social network. The company enables users to meet new people through social games and apps, monetized by both advertising and virtual currency. MeetMe carries a Zacks Rank #2 (Buy) and has a VGM score of A. Shares of this company have increased nearly 15.8% year to date. Moreover, its long-term EPS growth rate is a whopping 20%.
Also, the stock has a forward P/E of 11.9x, which is a lot lower than the industry average of 23.8x.
MeetMe, Inc. Price and Consensus
MeetMe, Inc. Price and Consensus | MeetMe, Inc. Quote
Alphabet (GOOGL - Free Report) is one of the leading providers of target-based advertisements on the web.Revenues come from ads served alongside, with the company’s page ranking and text-matching technology and infrastructure facilitating the process.
This Mountain View, California-based company has a Zacks Rank #2 and a VGM score of B. Shares have increased nearly 11.8% in the last one year. Moreover, it has a long-term EPS growth rate of 16.25%.
Alphabet Inc. Price and Consensus
Alphabet Inc. Price and Consensus | Alphabet Inc. Quote
Bazaarvoice, Inc. (BV - Free Report) provides social commerce solutions through Bazaarvoice, a Software-as-a-Service platform that enables clients to capture, display, and analyze online word of mouth.
This company has a Zacks Rank #2 and a VGM score of B. Shares have increased nearly 38.10% in the last one year. Also, the company has a decent history of earnings beats. Bazaarvoice surpassed the Zacks Consensus Estimate thrice in the last four quarters, averaging a positive surprise of 52.58%.
Bazaarvoice, Inc. Price and Consensus
Bazaarvoice, Inc. Price and Consensus | Bazaarvoice, Inc. Quote
VeriSign (VRSN - Free Report) provides Internet infrastructure services that include domain name registry services and infrastructure assurance services. It is well positioned to benefit from strong growth in both developed and emerging economies. VeriSign carries a Zacks Rank #2 and has a VGM score of B. Shares of this company have increased nearly 14.60% year to date.
Also, the stock has a forward P/E of 24.4x, which is slightly lower than the industry average of 24.5x.
VeriSign, Inc. Price and Consensus
VeriSign, Inc. Price and Consensus | VeriSign, Inc. Quote
Looking Ahead
These stocks have managed to grab the spotlight with their remarkable performances, supported by solid earnings results and strong growth projections. Keeping this in mind, we believe parking your money in these stocks would yield high returns in the short term.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>