TripAdvisor, Inc. (NASDAQ:TRIP), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$24.56 and falling to the lows of US$18.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether TripAdvisor's current trading price of US$19.65 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TripAdvisor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is TripAdvisor worth?
Great news for investors – TripAdvisor is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $24.98, but it is currently trading at US$19.65 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because TripAdvisor’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of TripAdvisor look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for TripAdvisor, at least in the near future.
What this means for you:
Are you a shareholder? Although TRIP is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to TRIP, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on TRIP for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into TripAdvisor, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for TripAdvisor you should be mindful of and 1 of these is significant.
If you are no longer interested in TripAdvisor, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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