Shares of Indian travel portal MakeMyTrip (Nasdaq: MMYT) hit a 52-week low today. Let's take a look at how the company got there to find out whether cloudy skies remain on the horizon.
How it got here
Though MakeMyTrip is profitable, it remains perhaps the costliest travel company you can buy. Recent run-ins with Indian regulators haven't helped its public perception, either. Despite an earnings beat today, investors seem to be tiring of the company's sky-high valuation. It's one of the few underperformers in the travel sector since its 2010 debut, with fellow foreign travel service Ctrip.com (Nasdaq: CTRP) sporting similar losses:
MMYT Total Return Price data by YCharts
What you need to know
Though MakeMyTrip is profitable now, it's not been that way for long, so the market's still adjusting somewhat to the company's new status. Let's see how it stacks up against its peers:
|
Company |
P/E Ratio |
3-Year Annualized Earnings Growth |
Net Margin (TTM) |
|---|---|---|---|
| MakeMyTrip | 136.8 | 38.2%* | 2.5% |
| Ctrip.com | 17.9 | 18.3% | 27.7% |
| Priceline.com (Nasdaq: PCLN) | 30.2 | 32.2% | 24.7% |
| Expedia (Nasdaq: EXPE) | 15.0 | 4.2% | 4.5% |
| Travelzoo (Nasdaq: TZOO) | 17.7 | 59.4% | 14% |
Source: Yahoo! Finance. *Revenue growth rate used due to prior negative earnings.
When you look over the field, it seems like the market's reactions have been a rejection of MakeMyTrip's present triple-digit premium. Sure, revenue growth has been respectable, but Priceline and Travelzoo are no slouches either, and both sport superior margins. Expedia, with twice the profitability, is nine times less pricey, and Ctrip's in similar territory despite an industry-leading net margin. MakeMyTrip was last year's fastest-growing travel company, but its potential is still a ways off, and as with many foreign stocks, growth investors might have to really hunt to find the numbers and news to confirm a long-term thesis.
What's next?
Where does MakeMyTrip go from here? That will depend on the market's warming to its prospects and its earnings growth accelerating. If The Motley Fool's CAPS community is to be believed, savvy investors are pretty cool to its prospects. They've given MakeMyTrip an underwhelming two-star rating, with 32% of those chiming in expecting the stock to continue its 52-week trend lower.
Interested in tracking this stock as it continues on its path? Add MakeMyTrip to your Watchlist now for all the news we Fools can find, delivered to your inbox as it happens. If you're not sold on online travel stocks, the Fool's current top online pick might whet your appetite. Here's a hint: it's not Facebook. Find out which tech IPO you should be buying in our free report.
