Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, vacation rental website HomeAway (Nasdaq: AWAY ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at HomeAway's business and see what CAPS investors are saying about the stock right now.
HomeAway facts
| Headquarters (Founded) |
Austin, Texas (2004) |
| Market Cap |
$2.76 billion |
| Industry |
Internet information providers |
| Trailing-12-Month Revenue |
$217.3 million |
| Management |
Co-Founder/CEO Brian Sharples
Co-Founder/Chief Strategy Officer Carl Shepherd |
| Trailing-12-Month Operating Margin |
9.2% |
| Cash/Debt |
$172.1 million / $0 |
| Competitors |
Expedia (Nasdaq: EXPE )
priceline.com (Nasdaq: PCLN )
Wyndham Worldwide (NYSE: WYN ) |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 29% of the 68 members who have rated HomeAway believe the stock will underperform the S&P 500 going forward. These bears include All-Star cibient and MajorBob04.
Earlier this week, cibient touched on HomeAway's seemingly unsustainable valuation:
Dangerous to short on P/E alone, I know. But as others have mentioned, I don't think this is the next big thing. It's a little awkward to consider staying in a stranger's house, both for the owner and the visitor. Sorry, but this is not going to be the next [priceline.com].
In fact, HomeAway currently sports a particularly lofty forward P/E of 60.2. That represents a clear premium to competitors Expedia (12.9), Priceline (17.5), and Wyndham Worldwide (12.0).
CAPS member MajorBob04 expands on the underperform argument:
The concept of renting someone else's house serves a special niche in the marketplace for people who want to feel like they're in a "home away from home". And it makes sense for people to make some money when they're away for extended periods of time. ... But how many homes are available for this service? And how many people would like to stay in someone else's house? Between Hotels, Motels and B&B's, the market is pretty well served already.
I don't see how they're going to grow into [their P/E] in the near future. So I expect that valuation to drop eventually, probably in the next quarter or two. Then this stock might be a nice value play. But not right now.
What do you think about HomeAway, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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