Ctrip and MakeMyTrip Fly in Different Directions

Ctrip (NASDAQ: CTRP  ) and MakeMyTrip (NASDAQ: MMYT  ) parted ways in last week's trading action. Shares of Ctrip soared 16%, and MakeMyTrip's stock descended by 10%. 

The two online travel portals are often lumped together by investors as the leaders of the world's two most populous nations. Ctrip is China's leading player. MakeMyTrip is the top dog in India. However, it's no surprise China's been the faster-growing economy. India's slow migration to cyberspace has made it a poor bet for investors hoping to cash in on the inevitable online revolution. There's a surprising twist to this story, but let's save that for later. Let's board last week's trading activity.

Ctrip soared on better-than-expected results. Revenue soared 31%, and its profit of $0.28 a share performed a flyby to embarrass Wall Street's control tower. Analysts were only holding out for net income of $0.23 a share. The beat isn't a surprise. Ctrip beat Wall Street's earnings estimates by better than 20% every single quarter through 2013.  

Ctrip's strength was fueled by a 37% boost in its hotel bookings, but even its other major contributor -- air ticketing -- was no slouch with its 29% advance.

MakeMyTrip, on the other hand, didn't have fresh financials to put out. Investors merely continued to shuffle out of the stock after uninspiring financial results last month led Oppenheimer to downgrade the stock earlier this month. Revenue growth was solid at nearly 23% on a constant currency basis, but the lack of profitability on a reported basis and a soft outlook held the stock back. Oppenheimer's analyst was concerned that its guidance called for a much steeper sequential decline than it has reported in the past. It went on to announce an acquisition of a company that will help it boost its online hotel bookings, but the market wasn't rallying behind MakeMyTrip.

Online travel just isn't enough of an industry in India for investors to jump on the shares, and the country's perpetually fading currency makes it a gamble on a depreciating asset. After all, 23% revenue growth in rupees sounds great, but MakeMyTrip's dollar-denominated accounting actually resulted in a 10% top-line increase.  

Ctrip's holding up considerably better. It is forecasting revenue to climb 25% to 30% for the current quarter. That suggests decelerating growth, but Ctrip's a bit of a lowballer here. Three months ago, it was only targeting a 20% to 25% uptick in revenue. We now know it was actually a heartier 31% advance.

There was a surprise twist promised earlier, and there's no point in keeping it from you. Despite Ctrip's clearly superior fundamentals and last week's divergence in trading, MakeMyTrip is the stock that's actually trading higher in 2014. Ctrip is still showing a negative return for investors this year.

That's not fair, but it also points to the value in Ctrip's stock at this point. MakeMyTrip may have more upside once India comes around to fully embracing travel in general, and online travel in particular, but Ctrip's the one blowing the pros away on a consistent basis right now.

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