Trip Paris
Paris. Source: TripAdvisor

Nearly everyone likes to travel, and one of the best things about traveling is getting to talk about it after you get back. Travel-review website TripAdvisor (NASDAQ:TRIP) turned that basic fact into a profitable business, and ever since its spinoff from Expedia (NASDAQ:EXPE) a few years ago, it has enjoyed strong growth and earned solid gains for its long-term shareholders. More recently, though, TripAdvisor fell prey to the downdraft in the broader market, and even as major-market indexes have returned to record highs, TripAdvisor is still looking to regain its lost ground since the middle of 2014.

TripAdvisor is a go-to site for those seeking information about all aspects of travel, ranging from hotel and flight planning to restaurant reviews and other things to do in popular destinations. Because of the link between the health of the overall economy and travel activity, TripAdvisor has been well-placed to benefit as the U.S. economy has outgrown many other countries across the globe. Let's take an early look at what's been happening with TripAdvisor over the past quarter and what we're likely to see in its report.

Stats on TripAdvisor

Analyst EPS Estimate

$0.60

Change From Year-Ago EPS

33%

Revenue Estimate

$348.81 million

Change From Year-Ago Revenue

37%

Earnings Beats in Past 4 Quarters

0

Source: Yahoo! Finance

Will TripAdvisor earnings get a good review?
Investors have stayed enthusiastic about TripAdvisor earnings in recent months, sustaining their growth projections for the third quarter and the full 2014 year. The stock, though, has given up ground, falling 9% since late July.

TripAdvisor's second-quarter results demonstrated the solid growth that the travel-review company has generated but also showed some of the challenges in keeping costs down. Overall revenue grew at a 31% pace from the year-ago quarter, as sales from click-based advertising managed to post a 28% gain. But TripAdvisor had to make bigger spending increases of more than 50% in its marketing budget in order to drive those sales, and as a result, net income growth was slower than expected. With shares having priced in much loftier expectations for growth, TripAdvisor saw its shares drop substantially following the announcement.

Trip London
London. Source: TripAdvisor

TripAdvisor has made huge gains in diversifying its revenue sources. At first, TripAdvisor got almost all of its revenue from traditional click-based advertising banners on its online website. But the company has made its site more focused and user-friendly, improving the value of its leads, and it has also moved into areas like vacation rentals and mobile platforms to gain exposure to the opportunities in those niches as well. As long as TripAdvisor can find more profit sources, ideally with high margins to boot, then investors can expect the stock to bounce back at some point.

Still, TripAdvisor faces an extremely competitive environment. Priceline Group (NASDAQ:PCLN) has made its own foray into the review space with its acquisition of restaurant review specialist OpenTable, and several other companies in the travel space have sought to integrate reviews into their information offerings in order to broaden their usefulness for their customers. In addition, the move from desktop systems to mobile devices has essentially let also-rans in the PC world get a second chance from catering to smartphone and tablet users, and TripAdvisor has had to answer the call in order to sustain its competitive advantage onto mobile platforms.

In the TripAdvisor earnings report, be sure to watch both the top-line and bottom-line numbers to see if the company is better able to clamp down on costs than it was last quarter. Although growth is important for TripAdvisor's future, growth at any cost won't help the company's efforts to build a sustainable customer base from multiple revenue sources. Moreover, given the competitive pressures in the space, TripAdvisor will have to work hard if it wants to keep up its perceived advantage in the review space into the future.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Priceline Group and TripAdvisor. The Motley Fool owns shares of Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.