Morningstar

Marketing Efficiency, Revenue Growth Key for TripAdvisor

Marketing Efficiency, Revenue Growth Key for TripAdvisor
Securities In This Article
Tripadvisor Inc
(TRIP)

Dan Wasiolek: We see two key takeaways for investors from TripAdvisor's positive fourth-quarter results. The first is marketing efficiency and the second is a stabilization in revenue growth. During the quarter, TripAdvisor saw over 400 basis points of marketing leverage driven by improved data analytics that allowed the company to identify and eliminate unprofitable marketing channels. We think this can continue to be a driver through 2018.

Despite the lower marketing costs, TripAdvisor saw stabilization in its sales growth, with revenue growing 2% in the quarter above our forecast calling for 2% decline, aided by a new user interface and TV campaign, both of which launched last summer. These initiatives, along with the company's intact network effect, should position the company, in our opinion, to reaccelerate revenue growth to a low-double-digit level starting in 2019.

Although the share price has moved up in response to the report, shares still trade at a discount to our fair value, leaving an opportunity for investors to own a high quality name at a discount.

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About the Author

Dan Wasiolek

Senior Equity Analyst
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Dan Wasiolek is a senior equity analyst, AM Consumer, for Morningstar*. He covers gaming, lodging, and online travel. Names covered within the gaming industry are Wynn Resorts, Las Vegas Sands, MGM Resorts, Caesars Entertainment, Penn Entertainment, and DraftKings. In the hotel industry Dan covers Marriott, Hilton, InterContinental, Hyatt, Wyndham, Choice, and Accor. Other travel related names under his coverage are Booking Holdings, Expedia, Airbnb, Tripadvisor, Sabre, and Amadeus.

Before joining Morningstar in 2014, Wasiolek spent 16 years as an analyst and portfolio manager covering US mid- and large-cap strategies for Driehaus Capital Management. During the first half of his time at Driehaus, Dan’s responsibilities as an analyst included analyzing and recommending stocks across all sectors and industries for inclusive in the portfolios. Then in the second half of his tenure at Driehaus, Dan was responsible for stock selection and portfolio management of the US mid- and large-cap strategies, as well as co-managing in-house smaller-cap portfolios.

Wasiolek holds a bachelor’s degree in business administration from Illinois Wesleyan University and a master’s degree in business administration, with a concentration in finance, from the DePaul University Kellstadt School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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