On Friday, Expedia Group Inc. (NASDAQ:EXPE) shares rallied more than 15% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results Thursday after markets closed, beating the consensus for analyst expectations on revenue and earnings.
Expedia posted FQ3 non-GAAP earnings per share of $3.53, beating the average form analyst estimates of $1.68. On the other hand, its GAAP EPS of $2.26 outperformed the average Street forecast of $1.07, while revenue for the quarter increased by more than 97% from the same period last year to $2.96 billion, exceeding expectations by $240 million.
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Expedia expects the recovery to continue in Q4 as more countries reopen for international travellers, thus boosting its growth outlook.
Expedia’s exciting recovery
From a valuation perspective, Expedia shares trade at a reasonable forward P/E ratio of about 23.98, making it an interesting opportunity for value investors.
On the other hand, although analysts expect earnings to decline by more than 600% this year, they also forecast a significant recovery of more than 885% next year.
Therefore, the stock could be a compelling opportunity for bargain hunters.
Technically, Expedia shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has spiked towards the trendline resistance, pushing it closer to overbought conditions.
Therefore, given this year’s projected earnings decline, short-term investors could target potential pullbacks at about $172.17, or lower at $160.41, while $187.96 and $199.38 are crucial resistance levels.
Should you bet long?
In summary, although Expedia shares seem perfectly positioned for a short-term pullback, the stock trades at exciting valuation multiples whilst its recovery appears to be on track after its FQ3 beat.
Therefore, long-term investors willing to overlook the short-term turbulence could still buy the stock.
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