Trip.com Group Ltd (TCOM, Financial) has experienced a notable fluctuation in its stock price over recent periods. The company's market capitalization stands at a robust $29.81 billion, with the current stock price at $46.13. Over the past week, TCOM has seen a slight decline of 1.75%, yet this short-term loss is overshadowed by a significant gain of 21.91% over the past three months. According to GuruFocus's valuation metrics, the stock is currently modestly undervalued with a GF Value of $58.16, an increase from the past GF Value of $57.42. This marks a positive shift from the previous assessment of a possible value trap, suggesting that investors should think twice before investing.
Understanding Trip.com's Market Position
Trip.com Group Ltd, operating within the dynamic travel and leisure industry, is the largest online travel agent in China. The company has capitalized on China's growing demand for outbound travel, which is significant given the country's low passport penetration rate of just 12%. In 2020, Trip.com generated approximately 78% of its sales from accommodation reservations and transportation ticketing, with the remainder stemming from package tours and corporate travel. Despite the challenges posed by the pandemic, the company's international business, which accounted for 25% of its 2019 revenue, remains a key component of its margin expansion strategy. Trip.com's sales are primarily driven by its websites and mobile platforms, with additional contributions from call centers. The company faces competition from other online travel agencies (OTAs) in China, such as Meituan, Fliggy backed by Alibaba, Tongcheng, and Qunar. Founded in 1999, Trip.com went public on the Nasdaq in December 2003.
Assessing Trip.com's Profitability
Trip.com's Profitability Rank is currently at 5/10, indicating a moderate level of profitability within the industry. The company's Operating Margin is impressive at 25.41%, outperforming 87.53% of 818 companies in the industry. Additionally, Trip.com's ROE (Return on Equity) stands at 8.35%, higher than 58.2% of its peers. The ROA (Return on Assets) at 4.63% and ROIC (Return on Invested Capital) at 4.95% also place the company in a favorable position compared to more than half of the companies in the sector. Over the past decade, Trip.com has maintained profitability for seven years, which is better than 61.01% of 772 companies in the industry.
Exploring Trip.com's Growth Trajectory
The Growth Rank for Trip.com is relatively low at 2/10, reflecting challenges in the company's recent growth metrics. The 3-Year Revenue Growth Rate per Share has decreased by 18.00%, which is still better than 15.28% of 772 companies in the same industry. The 5-Year Revenue Growth Rate per Share also shows a decline of 11.70%, surpassing 27.79% of 727 companies. The 3-Year EPS without NRI Growth Rate has seen a significant drop of 38.70%, yet this is better than 12.96% of 494 companies. However, looking forward, the EPS Growth Rate (Future 3Y To 5Y Est) is projected at an optimistic 66.78%, which is higher than 89.23% of 65 companies, indicating potential for future growth.
Investor Confidence in Trip.com
Notable investors have taken significant positions in Trip.com, demonstrating confidence in the company's prospects. Ken Fisher (Trades, Portfolio) holds 3,672,896 shares, representing 0.57% of the company, while Richard Pzena (Trades, Portfolio) owns 2,711,810 shares, accounting for 0.42%. Jim Simons (Trades, Portfolio) also has a stake with 2,086,912 shares, making up 0.32% of Trip.com. The involvement of these prominent investors may influence the stock's performance and investor sentiment.
Competitive Landscape
When compared to its competitors, Trip.com holds a strong market position. Carnival Corp (CCL, Financial) has a market capitalization of $21.67 billion, Royal Caribbean Group (RCL, Financial) stands at $35.93 billion, and Expedia Group Inc (EXPE, Financial) is valued at $18.39 billion. Trip.com's market cap of $29.81 billion places it comfortably within this range, indicating its competitive standing in the travel and leisure industry.
Conclusion
In summary, Trip.com Group Ltd's stock performance and valuation suggest a company that is currently modestly undervalued according to the GF Value. The company's profitability metrics are solid, with a strong operating margin and a decent ROE, ROA, and ROIC. Despite a low Growth Rank, the projected future EPS growth is highly promising. The positions held by major investors like Ken Fisher (Trades, Portfolio), Richard Pzena (Trades, Portfolio), and Jim Simons (Trades, Portfolio) could be indicative of the stock's potential. When juxtaposed with its competitors, Trip.com's market cap reflects its robust standing in the market. Value investors may find Trip.com an interesting prospect, especially considering its recent price performance and future growth estimates.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
