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Trip.com Group Limited TCOM has gained 32.5% in the past six months, outperforming the Zacks Leisure and Recreation Services industry, the Zacks Consumer Discretionary sector and the S&P 500 Index. The detailed price performance is shown in the chart below.
Image Source: Zacks Investment Research
This China-based travel service provider is banking on investments made in several growth initiatives amid global travel demand. The company’s continuous efforts to enhance and diversify its offerings along with the artificial intelligence (AI)-driven technological revolution bode well.
The Zacks Consensus Estimate of the company’s 2025 earnings per share (EPS) has moved north from $3.77 to $3.98 in the past 60 days. The estimated value indicates 7.3% year-over-year growth. Also, during the same time frame, the earnings estimates for the first quarter of 2025 have trended upward to 88 cents from 87 cents, indicating 6% growth from a year ago. The company’s earnings surpassed expectations in each of the trailing four quarters, with the average surprise being 42.8%.
Let us discuss the factors why investors must consider adding this Zacks Rank #1 (Strong Buy) stock to their portfolio now.
What’s Driving Trip.com Stock?
Robust Travel Demand: Trip.com’s prospects are benefiting from the growing travel demand for both domestic and cross-border travel. With easing macro conditions across the globe, consumers seem to be optimistic, resulting in heightened travel sentiments.
The domestic Chinese market’s travel demand is strong, especially for inland and lesser-known destinations, contributing to the further development of local tourism. This backdrop, coupled with the company’s product offerings, is aiding its top-line growth. Moreover, on the international front, global businesses continue to witness strong momentum, resulting in increased air ticket bookings and hotel reservations.
Growth Investments: The company has consistently focused on several investments to enhance its product offerings against improving travel demand trends. The diversified portfolio of travel and hotel booking packages, which vary throughout the year during peak travel seasons and festivals, is an attractive aspect of Trip.com. Furthermore, its focus on technological advancements bodes well.
The company is continuously working on integrating AI into its services to offer better services to its customers and cater to more personalized demands. The trend across TCOM’s international OTA platform is noteworthy. This international OTA platform has become the most downloaded OTA app in various markets, including Hong Kong, Macau, Taiwan, South Korea, Singapore, Malaysia and Thailand, reflecting its strong presence in the APAC region. During the third quarter of 2024, air ticket and hotel bookings on the platform grew more than 60% year over year, with bookings from the APAC region increasing more than 70%. Trip.com aims to further foster the demand trends by using several marketing initiatives focused on the international OTA platform to support its global business.
Favorable Valuation Trends: Trip.com is currently trading at a discount compared with the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price increase in the past six months, it remains an attractive option for investors looking for a suitable entry point.