Once again, Ctrip.com (Nasdaq: CTRP) journeyed through a terrific quarter.

China's leading travel portal delivered $121 million in revenue, 49% ahead of last year's figure. Margins improved so much that operating profits and net income grew even faster than Ctrip's top line.

Ctrip wound up earning $0.31 a share, or $0.37 a share before stock-based compensation expenses. No matter how you like your bottom lines, Ctrip obliterated analyst expectations, which called for $0.24 a share on $116.9 million in revenue.

All four of Ctrip's segments grew by at least 36% during the quarter, with a 161% surge in package tours leading the way.

Unfortunately, the market isn't impressed. Despite the blowout results, the stock ticked lower, given Ctrip's outlook for 30% to 35% revenue growth during the current quarter. Analysts had penciled in top-line growth of 40% for the fourth quarter.

Silly Mr. Market! Doesn't he know Ctrip's penchant for lowballing? Three months ago, Ctrip pegged its third-quarter revenue to grow between 35% and 40%. We now know that Ctrip's top line surged by 49%. Don't be surprised if analysts stick to their guns, knowing full well that Ctrip loves to underpromise and overdeliver.

But while Ctrip may be the best of China's travel stocks, it also occupies a generally overvalued hospitality sector. Let's quickly review China's travel portals and lodging chains:



2011 EPS est.


Ctrip.com $52.15 $1.25 42
eLong (Nasdaq: LONG) $17.93 $0.31 58
Universal Travel (NYSE: UTA) $5.91 $1.51 4
Home Inns & Hotels (Nasdaq: HMIN) $51.33 $1.62 32
China Lodging (Nasdaq: HTHT) $22.82 $0.58 39
7 Days (NYSE: SVN) $19.87 $0.54 37

Source: Yahoo! Finance.

Set aside Universal Travel as an anomaly, and the rest of the key players are trading for more than 30 times next year's projected profitability.

Investors are willing to pay a premium for travel stocks in booming countries. India's MakeMyTrip (Nasdaq: MMYT) went public this summer -- becoming the hottest debut since 2007 -- even though it had posted years of losses before turning the corner earlier this year.

The markups may be worth it. In Ctrip's case, its growth justifies the premium. However, investors need to be choosy. They wouldn't book a trip without comparing prices at rival sites, and they shouldn't invest in any hot industry without making sure they're getting the best deal possible.

Do you own any Chinese travel-related stocks? Share your thoughts in the comment box below.