Expedia Falls as Revenues Disappoint

Published on Friday, 10 February 2012 13:28 Written by J Hawk

New York, February 10^th (TradersHuddle.com) – Bellevue, Washington based Expedia, Inc. (NASDAQ: EXPE) released fourth quarter and yearly earnings results after yesterday’s market close that showed slightly better than expected earnings for the world’s largest online travel company. Nevertheless, the firm’s fourth quarter revenues fell short of the consensus of market analysts’ expectations. 

According to the company’s earnings report, Expedia, Inc. reported adjusted net income of $80.6 billion in the last quarter of 2011 that concluded on December 31^st.  That number amounts to Q4 2011 adjusted earnings of $0.58 per common share, or a diluted EPS of $0.44 per share. The adjusted EPS result was a bit higher than the consensus of $0.54 per share, according to a survey of market analysts performed by Thompson Reuters.

On balance, the stock market responded to Expedia, Inc.’s latest earnings news by taking its shares lower. After the announcement, Exxon Mobil’s stock was marked sharply lower by the market at the open to trade as low as $31.86. The stock then recovered somewhat to trade at $33.37 as of this writing, showing a modest loss of -2.31% on the day or -$0.79 in more active than usual trading of 3.5 million shares on the NASDAQ.

Expedia, Inc. Q4 Revenues Rose Less Than Expected, Sales Grew

In terms of its revenues, Expedia showed Q4 revenues of $787.1 million compared with the $737.6 million seen in the fourth quarter of 2010, showing a rise of 7%. For the year, the firm’s revenues gained 14% from $3.0336 billion in 2010 to $3.449 billion in 2011.

Despite the revenue increase, the consensus of market analysts was expecting better, with a Thompson Reuters survey result centered on Q4 revenues of $812.4 million for Expedia.

The online travel firm displayed strong growth in sales, as they rose 14% to $3.45 billion.  In addition, Expedia’s total room night growth was 19% for Q4 2011, an improvement over the 17% room night growth the company reported for the Q3 2011. Expedia attributed this rise to faster growth in both the Americas and Asian Pacific regions.

Expedia Details Stock Buy Back Plan

The firm also announced the details of its common stock repurchasing program. For Q4 of 2011, Expedia bought back 3.1 million common stock shares at a total expense of $83 million on a pre-reverse split basis.

Furthermore, for the entire year of 2011, Expedia reported having repurchased 10.6 million shares on a pre-reverse split basis for a total cost of $283 million.

The Technical Picture for Expedia Remains Bullish

From a technical perspective, Expedia’s (NASDAQ: EXPE) share price has shown a somewhat volatile long term upwards trend that has dominated trading since the first quarter of 2009.

After rising throughout the first half of 2011, and then correcting lower as far as the $22.43 level by October 4^th, the stock has since demonstrated an overall upwards trend that appears steeper than normal.

Furthermore, the initial move lower to $31.86 on Expedia’s earnings report today has taken the stock off of its recent all-time high set at the $34.25 level just a week ago on February 3^rd.

Resistance is now observed at the stock’s all-time high of $34.25, while support is noted at $33.18, $30.42, $28.02 and $27.78.