When it comes to investing in a company, you want to turn over as many stones as possible. The most logical places to look are revenue and profitability. Savvy investors will also look at whether a company is on-trend, whether its cash flow is strong enough for reinvestments in its business and capital returns to its shareholders, and how its management has historically performed at other companies. In most cases, you can dig a lot deeper and in many different ways.
One such way is to study anonymous employee reviews, which is now possible for everyone to do, thanks to Glassdoor.com. This popular website has approximately 4 million examples of anonymous employee feedback from companies all around the globe.
Happy employees are usually more productive employees. Therefore, if you find a company that has been underperforming its peers but whose employees are happy, hardworking, and innovative, then it could lead to a bargain opportunity from an investing standpoint.
Luckily for investors, Glassdoor has just released their list of "50 Best Places to Work" for 2014. Orbitz Worldwide (NYSE: OWW ) has been ranked No. 9 on that list, a prestigious honor. However, this doesn't necessarily mean that Orbitz is likely to present a better investment opportunity than peers priceline.com (NASDAQ: PCLN ) and/or Expedia (NASDAQ: EXPE ) .
It all starts at the top. Therefore, let's first consider the CEO rankings for Orbitz and its peers, based on anonymous employee feedback. When reading these numbers, keep in mind that the average CEO approval rating on Glassdoor (throughout all industries) is 69%, meaning that on average, 69% of employees approve of the job their company's CEO is doing.
Orbitz employees have given their CEO, Barney Harford, an approval rating of 88%. This is higher than Expedia CEO Dara Khosrowshahi's approval rating of 76% (still above the average) yet not as high as Priceline CEO Jeff Boyd's approval rating of 94%.
The difference in these ratings likely stems from working environments more than anything else. Based on anonymous employee reviews, Orbitz is a work-hard/play-hard environment that is also team-oriented and supports creative ideas. Priceline is similar in this regard, being seen as highly innovative and offering a good work/life balance. The one negative at Priceline (for employees, not investors) is that the company is seen as frugal, but this could be seen as a positive for investors.
According to employees, Expedia is a more serious working environment, which is good in a sense, but it also limits creative potential. However, Expedia employees are pleased with the company's stability.
Employees don't just rate the CEO on Glassdoor; they also rate the company overall, on a scale of 0 to 5, with 5 being the highest. According to Glassdoor's "50 Best Places to Work" list, Orbitz employees had rated the company a 4.3 of 5. And 87% of employees would recommend the company to a friend, which is excellent.
Comparatively, Priceline employees rated their company a 3.9 of 5, and 80% of employees would recommend the company to a friend. Expedia employees rated their company a 3.3 of 5, and only 65% of employees would recommend the company to a friend.
Based on these ratings, Orbitz and Priceline seem to offer better working environments than Expedia, which could lead to more productivity from the former two in the future. In the meantime, you might want to consider some other important numbers.
Key metric comparisons
Priceline outperformed its peers on the top line in the past year:
Despite Priceline growing faster than Orbitz, it's trading at 23 times forward earnings, whereas Orbitz is trading at a more expensive 26 times forward earnings. Expedia is trading at just 17 times forward earnings, and it's the only company of the three to pay a dividend; it currently yields 1%. Dividend payments are nice, but at 1%, it's not likely to sway your decision. Let's add it all up.
Orbitz's long-term potential might be overlooked. The company's culture is likely going to lead to a resilient group of hardworking and intelligent people finding a way to succeed. That said, this is a highly competitive industry, and Orbitz is trading at a premium to Priceline, which is growing faster, offers a similar culture, and is excellent at keeping costs low. Therefore, Priceline remains best of breed in my book.
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