Silly analysts. They'll believe anything.
How did that quarter ultimately shape up? Well, revenue soared 55% higher to $43 million at China's leading online travel booking agency. Earnings per share soared 68% to $0.26 a share before stock-based compensation expenses, or $0.21 per share on a reported basis. Wall Street was only banking on a profit of $0.17 a share.
Let me state the obvious: If 35% growth is a sandbag, you must be doing something right. Let's also break down the three product lines to drive two other points home.
- Hotel reservation revenue rose 40% on a 38% uptick in rooms booked.
- Airfare revenue climbed 76% higher on a 69% boost in the number of air tickets sold.
- Packaged tour sales grew by 61% during the quarter.
The first point is that every single segment grew by substantially more than the 35% bar that the company had set for itself. My second point -- and it's why I'm spelling out the number of nights and airline seats booked by Ctrip.com -- is that the company is milking slightly more off each transaction.
Ctrip is impressive. Smaller rival eLong
Ctrip has now soundly beaten Wall Street's profit targets in each of this year's three quarters. You have to go back to the second quarter of 2006 to find the last time that eLong didn't come up short on the bottom line.
If you want to get even more excited about Ctrip, keep in mind that the company is running on all cylinders even before we get into the slam-dunk of next summer's Olympic Games in Beijing. Companies like Ctrip, lodging specialist Home Inns
Ctrip is an easy sell as a story stock. Stateside portals like Orbitz Worldwide
Unfortunately, that kind of scintillation comes at a price. Ctrip trades at nearly 60 times next year's projected profitability. That isn't cheap. It may not be as rich as Baidu
But what's that? Ctrip is now also saying that the current quarter will grow its revenue by at least 35%? That sandbag trap feels awfully familiar. Let's see if the analysts fall for it again.
Silly analysts. They really will believe anything.
Book this Foolishness:
Ctrip is a Motley Fool Hidden Gems stock pick, while Priceline.com is a Motley Fool Stock Advisor newsletter recommendation. Baidu.com is a Rule Breakers selection. Which stock research service is the right one for you? Check any of them out with a free 30-day trial subscription offer.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.