Domestic leisure travel spending has already surpassed pre-pandemic levels, while business travel is gaining traction and is expected to reach 81% of pre-pandemic levels this year. Analysts expect robust travel demand despite the soaring inflation and declining consumer sentiment.
Moreover, Commerce Secretary Gina Raimondo recently announced a new National Travel and Tourism Strategy to support the U.S. travel and tourism industry. The U.S. Travel & Tourism market revenue is expected to grow at a CAGR of 4.7% to reach $211.10 billion by 2026.
According to a survey conducted by the travel company trivago (TRVG), 83% of the cohort believed that 2022 would be their best summer yet for travel and adventure.
Given this backdrop, fundamentally strong travel stocks Bluegreen Vacations Holding Corporation (BVH), Expedia Group, Inc. (EXPE), trivago N.V. (TRVG), and Travelzoo (TZOO) might be great investments now.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests (VOI) and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others.
On May 3, 2022, BVH announced the completion of a private offering and sale of approximately $172.0 million of vacation ownership interest receivable-backed notes. “This securitization, along with our previously completed renewal and extension of our corporate facility, positions us well for continued growth in our business,” commented Ray Lopez, CFO and COO of Bluegreen Vacations.
BVH’s revenue increased 33.3% year-over-year to $195.13 million in the first quarter ended March 31. The company’s adjusted EBITDA came in at $34.32 million, up 115.1% year-over-year.
Its net income improved 249% year-over-year to $19.21 million, while its earnings per share increased 406.7% from its year-ago value to $0.76. In addition, its net cash provided by operating activities grew 146.4% from the year-ago value to $29.49million.
The consensus EPS estimate of $3.48 for the fiscal year (ending December 2022) indicates a 21.1% improvement year-over-year. The consensus revenue estimate for the current year is expected to grow 10.6% from the prior-year period to $837.02 million.
The stock has gained 46.1% over the past year to close its last trading session at $24.42.
BVH’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BVH is rated an A in Value and Sentiment and a B in Quality. Within the Travel - Hotels/Resorts industry, it is ranked #1 out of 22 stocks. Click here to see additional POWR Ratings for Growth, Momentum, and Stability for BVH.
Expedia Group, Inc. (EXPE)
EXPE is an online travel company operating through Retail; B2B; and trivago segments. The company’s brand portfolio includes Brand Expedia, Hotels.com, Vrbo, Hotwire, and CarRentals.com.
On May 4, EXPE debuted its three-tiered strategy to redefine its place in the travel industry by introducing its new technology platform Expedia Group Open World, a reimagined marketplace that serves travelers, partners, and the industry. The new platform is expected to deliver an e-commerce suite that would enable anyone to enter the travel business.
EXPE’s revenue increased 80.5% year-over-year to $2.25 billion in the first quarter ended March 31. Its adjusted EBITDA grew 398.3% from the year-ago value to $173 million. Free cash flow stood at $2.84 billion, up 41.6% from the prior-year period.
Analysts expect EXPE’s revenue for the fiscal 2022 third quarter (ending September 2022) to come in at $3.65 billion, representing a 23.2% rise year-over-year. Street expects the company’s EPS for the ongoing quarter to come in at $4.18, representing a growth of 18.3% year-over-year.
Additionally, the company has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
EXPE has gained 1.3% over the past five days to close its last trading session at $92.35.
It is no surprise that EXPE has an overall B rating, which translates to Buy in our POWR Ratings system. Additionally, it has a B grade for Growth, Value, and Quality. It is ranked #4 of 66 stocks within the Internet industry.
Beyond what we’ve stated above, we have also given EXPE grades for Momentum, Stability, and Sentiment. Get all the EXPE ratings here.
trivago N.V. (TRVG)
TRVG and its subsidiaries operate a hotel and accommodation search platform worldwide. It offers an online meta-search for hotels and accommodation through online travel agencies, hotel chains, and independent hotels. It is headquartered in Düsseldorf, Germany, and is an Expedia Lodging Partner Services Sarl subsidiary.
For the fiscal first quarter ended March 21, 2022, TRVG’s total revenue increased 165.9% year-over-year to €101.64 million ($102.52 million). Net cash provided by operating activities grew 186.4% to €12.10 million ($12.20).
As of March 31, 2022, the company’s cash and cash equivalents came in at €268.73 million ($271.40 million), compared to €256.38 million as of December 31, 2022.
The consensus EPS estimate of $0.02 for the fiscal 2022 second quarter (ended June 2022) reflects a rise of 246.7% year-over-year. Likewise, the $149.92 million consensus revenue estimate for the same quarter indicates an improvement of 32.1% from the prior-year period. The company has also topped the consensus EPS estimates in three of the trailing four quarters.
Over the past five days, the stock has gained 1.4% to close its last trading session at $1.44.
Our POWR Ratings give TRVG an A for Quality and a B for Growth and Value. It is ranked #2 in the Internet industry. The additional TRVG ratings for Momentum, Stability, and Sentiment can be found here.
Travelzoo (TZOO)
TZOO is an Internet media company that provides travel, entertainment, and local deals from travel and entertainment companies and local businesses in Asia Pacific, Europe, and North America. Its products and publications include Travelzoo Website, Travelzoo iPhone and Android apps, Travelzoo Network, and Travelzoo Top 20 email newsletter.
On June 23rd, the company announced that its board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. The share repurchase program is expected to create greater shareholder value.
TZOO’s revenues increased 29.2% year-over-year to $18.45 million in the fiscal 2022 first quarter ended March 31, 2022. Its gross profit rose 38.7% year-over-year to $15.62 million. Its operating income grew 350.2% from the year-ago value to $1.92 million.
In addition, the company’s net income and net income per share came in at $2.36 million and $0.19, registering increases of 239.8% and 235.7% year-over-year, respectively.
The $80.38 million consensus revenue estimate for the fiscal year 2022 (ending December 2022) represents a 27.2% improvement from the same period in 2021. Analysts expect TZOO’s EPS for the current year to increase 412.9% year-over-year to $0.78. The company has topped the consensus EPS estimates in three of the trailing four quarters.
TZOO has declined 2.1% over the past month to close its last trading session at $5.97.
TZOO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. Moreover, it earned a B grade for Value and an A for Sentiment and Quality. Within the Internet industry, it is ranked #3.
In addition to the POWR Ratings grades highlighted, you can see the TZOO ratings for Growth, Momentum, and Stability here.
BVH shares were trading at $25.27 per share on Monday afternoon, up $0.85 (+3.48%). Year-to-date, BVH has declined -27.60%, versus a -17.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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