I only really looked at P/E ratio's for my valuation. I am interested in others take on this also. I think that Wotif has one of the lowest P/E ratios and highest dividends in the market.
Wotif 12.2 P/E, 6.7% DIV Flight Centre 17.3 P/E, 3.27% DIV Trip Advisor 38.77 P/E, N/A DIV Expedia 22-40 P/E, 0.9% DIV
I think Wotif will still average around 12x P/E and a solid dividend even with the profit downgrade. I kind of think that the other sites are expensive as much as I think Wotif is cheap. Growth is another thing of course, but if Wotif was trading at similar multiples to peers it would reverse the recent drop and then some. I worry that Wotif is crippling themselves with their dividend, but keeping the dividend high could help with SP stability short term.
The concern is that some of those other companies could be overpriced. They certainly are trading at high multiples and if they drop a bit I am sure WTF will too (but probably not as much).
So the video is interesting, they're talking about short term earnings contractions, but long term growth and the share price has turned around significantly since that video came out. He talks about growth of mobile, android and last minute bookings. If so, Wotif has the perfect potential product in a "Last Minute" android app. At this point I can't find the app on Google Play and there is no pop up on the last minute website. This is simply a matter of checking device type (which all big websites do) and serving a pop up. Customer retention with apps is very high. It's a bit disappointing to see this and I hope with their "increased investment" this is something they are working on.
On the video, I think that Expedia spun off it's biggest growing asset in Trip Advisor, but thankfully they have bought a large stake in Trivago. I think the trend towards these aggregation type sites like Trivago is likely to continue. These aggregation sites offer a boost to sales, but long term they can really erode earnings if you or the market becomes dependent on them. They don't carry the overheads of booking systems or managing relationships with individual hotels, they simply scrape content from the booking pages of other sites. I would say the investment Expedia made in Trivago is more of a hedge than strategic. I don't know how long Trivago has been advertising here but I have noticed it a LOT recently.
However, aggregation is also a job that search engines can do. And if you believed that Google Hotels was going to be big you wouldn't be hedging your bet with Trivago this way. (I still think Trivago will grow nicely though)
To the point: Wotif still good value, I think it needs the investment that has (possibly) caused the current SP drop
WTF Price at posting:
$2.68 Sentiment: LT Buy Disclosure: Held
