Affordable Growth. Analyze the stocks which are showing good growth, decent profitability and health and are not overvalued from a fundamental perspective.


TRIP.COM GROUP LTD-ADR

Nasdaq / Consumer Discretionary / Hotels, Restaurants & Leisure

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to TCOM. TCOM was compared to 135 industry peers in the Hotels, Restaurants & Leisure industry. Both the profitability and the financial health of TCOM get a neutral evaluation. Nothing too spectacular is happening here. TCOM has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! With these ratings, TCOM could be worth investigating further for value and growth investing!.



6

1. Profitability

1.1 Basic Checks

In the past year TCOM was profitable.
TCOM had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: TCOM reported negative net income in multiple years.
TCOM had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

The Return On Assets of TCOM (4.53%) is better than 65.19% of its industry peers.
TCOM has a Return On Equity of 8.12%. This is in the better half of the industry: TCOM outperforms 65.19% of its industry peers.
TCOM has a Return On Invested Capital (5.32%) which is comparable to the rest of the industry.
Industry RankSector Rank
ROA 4.53%
ROE 8.12%
ROIC 5.32%
ROA(3y)1.66%
ROA(5y)1.35%
ROE(3y)2.96%
ROE(5y)2.48%
ROIC(3y)N/A
ROIC(5y)N/A

1.3 Margins

TCOM's Profit Margin of 22.28% is amongst the best of the industry. TCOM outperforms 94.81% of its industry peers.
In the last couple of years the Profit Margin of TCOM has grown nicely.
TCOM has a better Operating Margin (25.44%) than 90.37% of its industry peers.
TCOM's Operating Margin has improved in the last couple of years.
TCOM has a better Gross Margin (81.75%) than 94.07% of its industry peers.
TCOM's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 25.44%
PM (TTM) 22.28%
GM 81.75%
OM growth 3YN/A
OM growth 5Y24.77%
PM growth 3YN/A
PM growth 5Y44.06%
GM growth 3Y1.58%
GM growth 5Y0.54%

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6

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), TCOM is destroying value.
The number of shares outstanding for TCOM has been reduced compared to 1 year ago.
The number of shares outstanding for TCOM has been increased compared to 5 years ago.
The debt/assets ratio for TCOM has been reduced compared to a year ago.

2.2 Solvency

An Altman-Z score of 1.99 indicates that TCOM is not a great score, but indicates only limited risk for bankruptcy at the moment.
TCOM has a Altman-Z score of 1.99. This is comparable to the rest of the industry: TCOM outperforms 59.26% of its industry peers.
The Debt to FCF ratio of TCOM is 2.10, which is a good value as it means it would take TCOM, 2.10 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TCOM (2.10) is better than 85.19% of its industry peers.
TCOM has a Debt/Equity ratio of 0.33. This is a healthy value indicating a solid balance between debt and equity.
TCOM's Debt to Equity ratio of 0.33 is fine compared to the rest of the industry. TCOM outperforms 72.59% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.33
Debt/FCF 2.1
Altman-Z 1.99
ROIC/WACC0.72
WACC7.4%

2.3 Liquidity

A Current Ratio of 1.23 indicates that TCOM should not have too much problems paying its short term obligations.
TCOM has a Current ratio of 1.23. This is in the better half of the industry: TCOM outperforms 62.96% of its industry peers.
TCOM has a Quick Ratio of 1.23. This is a normal value and indicates that TCOM is financially healthy and should not expect problems in meeting its short term obligations.
TCOM has a Quick ratio of 1.23. This is in the better half of the industry: TCOM outperforms 65.93% of its industry peers.
Industry RankSector Rank
Current Ratio 1.23
Quick Ratio 1.23

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7

3. Growth

3.1 Past

TCOM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 121.01%, which is quite impressive.
Measured over the past years, TCOM shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.24% on average per year.
Looking at the last year, TCOM shows a very strong growth in Revenue. The Revenue has grown by 122.12%.
The Revenue has been growing slightly by 7.53% on average over the past years.
EPS 1Y (TTM)121.01%
EPS 3YN/A
EPS 5Y15.24%
EPS Q2Q%41.88%
Revenue 1Y (TTM)122.12%
Revenue growth 3Y34.44%
Revenue growth 5Y7.53%
Sales Q2Q%13.7%

3.2 Future

TCOM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.32% yearly.
The Revenue is expected to grow by 12.87% on average over the next years. This is quite good.
EPS Next Y23.65%
EPS Next 2Y18.25%
EPS Next 3Y16.53%
EPS Next 5Y16.32%
Revenue Next Year17.9%
Revenue Next 2Y16.66%
Revenue Next 3Y15.54%
Revenue Next 5Y12.87%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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7

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 13.85, the valuation of TCOM can be described as correct.
Based on the Price/Earnings ratio, TCOM is valued cheaper than 83.70% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 30.57. TCOM is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 12.69, which indicates a correct valuation of TCOM.
Based on the Price/Forward Earnings ratio, TCOM is valued a bit cheaper than 80.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of TCOM to the average of the S&P500 Index (22.04), we can say TCOM is valued slightly cheaper.
Industry RankSector Rank
PE 13.85
Fwd PE 12.69

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TCOM is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, TCOM is valued cheaply inside the industry as 88.89% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 10.05
EV/EBITDA 13.36

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
TCOM has a very decent profitability rating, which may justify a higher PE ratio.
TCOM's earnings are expected to grow with 16.53% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.59
PEG (5Y)0.91
EPS Next 2Y18.25%
EPS Next 3Y16.53%

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0

5. Dividend

5.1 Amount

TCOM does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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