Travelzoo (NASDAQ: TZOO) and Expedia (NASDAQ:EXPE) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, profitabiliy, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent recommendations for Travelzoo and Expedia, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Travelzoo 0 0 0 0 N/A
Expedia 0 6 18 1 2.80

Expedia has a consensus target price of $152.40, indicating a potential downside of 1.00%. Given Expedia’s higher possible upside, analysts plainly believe Expedia is more favorable than Travelzoo.

Profitability

This table compares Travelzoo and Expedia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Travelzoo 6.00% 28.08% 9.70%
Expedia 3.36% 11.01% 3.25%

Insider & Institutional Ownership

24.4% of Travelzoo shares are held by institutional investors. Comparatively, 80.9% of Expedia shares are held by institutional investors. 58.5% of Travelzoo shares are held by insiders. Comparatively, 21.0% of Expedia shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Expedia pays an annual dividend of $1.12 per share and has a dividend yield of 0.7%. Travelzoo does not pay a dividend. Expedia pays out 57.1% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Travelzoo and Expedia’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Travelzoo $126.15 million 1.14 $12.29 million $0.54 20.37
Expedia $9.06 billion 2.56 $1.10 billion $1.96 78.54

Expedia has higher revenue and earnings than Travelzoo. Travelzoo is trading at a lower price-to-earnings ratio than Expedia, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Travelzoo has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500. Comparatively, Expedia has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Summary

Expedia beats Travelzoo on 10 of the 16 factors compared between the two stocks.

About Travelzoo

Travelzoo, formerly Travelzoo Inc., is a media commerce company. The Company informs over 28 million members in Asia Pacific, Europe and North America, as well as various Website users, about the travel and entertainment deals available from a range of companies. The Company operates through three segments: Asia Pacific, Europe and North America. The Asia Pacific segment consists of the Company’s operations in Australia, China, Hong Kong, Japan, Taiwan and Southeast Asia. The Europe segment consists of the Company’s operations in France, Germany, Spain and the United Kingdom. The North America segment consists of Travelzoo’s operations in Canada and the United States. Its publications and products include the Travelzoo Websites, the Travelzoo Top 20 e-mail newsletter, the Newsflash e-mail alert service, the SuperSearch pay-per-click travel search tool, and the Travelzoo Network, a network of third-party Websites that list travel deals published by Travelzoo.

About Expedia

Expedia, Inc. is an online travel company. The Company operates through four segments: Core Online Travel Agencies (Core OTA), trivago, Egencia and HomeAway. The Company’s Core OTA segment provides a range of travel and advertising services to its customers across the world, through a range of brands, including Expedia.com and Hotels.com in the United States, and localized Expedia and Hotels.com Websites throughout the world, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Wotif Group, CarRentals.com and Classic Vacations. The Company’s trivago segment sends referrals to online travel companies and travel service providers from its hotel metasearch Websites. Its Egencia segment, which also includes Orbitz Worldwide (Orbitz) for Business, provides managed travel services to corporate customers across the world. The Company’s HomeAway segment operates an online marketplace for the vacation rental industry.

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