Booking travel in China is obviously a growth business. The only real mystery at market leader and Motley Fool Hidden Gems pick Ctrip
Let's start with the good stuff. Net revenues surged 52% higher to $37.8 million. Earnings per diluted share soared from $0.11 a share to $0.17 a share (or $0.22 per share if you back out stock-based compensation expenses). No matter how you slice it, Ctrip stormed past consensus estimates that were looking for a profit of $0.15 per share on $35.2 million in net revenues.
It was a well-rounded quarter. All three of the major travel types -- hotel, airline tickets, and packaged tour bookings -- grew by 45% or better during the period. Rival eLong
Tempering the enthusiasm is the company's forecast of 35% top-line growth in the current quarter. Analysts were banking on improvement of 39%. Ctrip tagged the outlook as "conservative guidance," but it was enough to send the shares lower in after-hours trading last night.
Expectations are high for China's travel sector. Ctrip and lodging specialist Home Inns
It's a far kinder climate than investors are finding closer to home. Orbitz
Ctrip offers greater upside than slower stateside players, but that opportunity doesn't come cheap. Trading at nearly 50 times next year's Wall Street profit targets, the market won't forgive mistakes. Thankfully, Ctrip isn't prone to disappointment. It has beaten expectations in four of the past five quarters. If the current quarter's guidance truly is conservative, this morning's dip may prove to be both an overreaction and a buying opportunity.
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Ctrip is a Hidden Gems stock pick, while Priceline.com is a Motley Fool Stock Advisor newsletter recommendation. Which stock research service is the right one for you? Check either one 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. Rick does not own shares in any of the companies in this story. The Fool has a disclosure policy.