How Low Can HomeAway Go?

Shares of HomeAway (Nasdaq: AWAY  ) hit a 52-week low recently. Let's look at how the company got here and whether dark clouds are ahead.

How it got here
HomeAway's disruptive model of the travel booking industry doesn't get as much respect as it deserves. Fellow Fool Tim Beyers and I sat down with CEO Brian Sharples back in March for a brief interview, and I came away generally impressed with the company's relatively newer initiatives to boost monetization. The company is offering a handful of new add-on services that promise to boost sales growth and traveler engagement.

First-quarter sales jumped 23.4% to $64.1 million, which was driven mainly by strong renewal rates and new listings. It squeezed out a profit of $0.03 per share and expects full-year sales between $280.4 million and $284.7 million. The company continues along its acquisition strategy to further build its presence in a fragmented market in desperate need of consolidation.

Most recently, a bearish ITG Investment Research report has been circulating that expresses caution and concern about HomeAway's prospects. The juicy details of the report haven't been made publicly available yet, but it's still contributed to HomeAway's drop.

How it stacks up
Let's see how HomeAway stacks up with some of its travel-centric peers.

AWAY Chart

AWAY data by YCharts.

We'll include some additional fundamental metrics for a deeper read.

Company

P/S (TTM)

Sales Growth (MRQ)

Net Margin (TTM)

ROA (TTM)

HomeAway 7.5 23.4% 2.9% 1.2%
Expedia (Nasdaq: EXPE  ) 1.7 12.2% 9.7% 4.8%
Priceline.com (Nasdaq: PCLN  ) 7 28.2% 24.8% 27.9%
TripAdvisor (Nasdaq: TRIP  ) 9.1 23.1% 26.6% NA

Source: Reuters. TTM = trailing 12 months. MRQ = most recent quarter. N/A = not available.

Traditional travel-booking sites like Expedia and Priceline target a slightly different segment of the market. Priceline continues to have enviable growth and profitability, as does recent Fool recommendation TripAdvisor.

What's next?
I still like HomeAway's long-term strategy, so I'm also going to give the company an outperform CAPScall today. Shares have gotten beaten down significantly ever since the company's IPO about a year ago, and the pessimism might just be an opportunity in disguise.

Add these travel players to your watchlist today to keep an eye on developments in the sector.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of priceline.com and TripAdvisor. Motley Fool newsletter services have recommended buying shares of TripAdvisor, priceline.com, and HomeAway. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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