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A Sliding Share Price Has Us Looking At Expedia Group, Inc.'s (NASDAQ:EXPE) P/E Ratio

Simply Wall St

To the annoyance of some shareholders, Expedia Group (NASDAQ:EXPE) shares are down a considerable 31% in the last month. The recent drop has obliterated the annual return, with the share price now down 22% over that longer period.


Check out our latest analysis for Expedia Group

How Does Expedia Group's P/E Ratio Compare To Its Peers?

Expedia Group's P/E is 28.01. As you can see below Expedia Group has a P/E ratio that is fairly close for the average for the online retail industry, which is 28.0.

NasdaqGS:EXPE Price Estimation Relative to Market, November 13th 2019

Expedia Group's P/E tells us that market participants think its prospects are roughly in line with its industry. So if Expedia Group actually outperforms its peers going forward, that should be a positive for the share price. I would further inform my view by checking insider buying and selling., among other things.

How Growth Rates Impact P/E Ratios

Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. That means even if the current P/E is high, it will reduce over time if the share price stays flat. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.

It's great to see that Expedia Group grew EPS by 16% in the last year. And earnings per share have improved by 38% annually, over the last three years. With that performance, you might expect an above average P/E ratio.

Remember: P/E Ratios Don't Consider The Balance Sheet



Is Debt Impacting Expedia Group's P/E?

Net debt totals just 3.3% of Expedia Group's market cap. It would probably trade on a higher P/E ratio if it had a lot of cash, but I doubt it is having a big impact.

The Bottom Line On Expedia Group's P/E Ratio

Expedia Group trades on a P/E ratio of 28.0, which is above its market average of 18.2. Its debt levels do not imperil its balance sheet and it is growing EPS strongly. Therefore, it's not particularly surprising that it has a above average P/E ratio. Given Expedia Group's P/E ratio has declined from 40.5 to 28.0 in the last month, we know for sure that the market is significantly less confident about the business today, than it was back then. For those who prefer to invest with the flow of momentum, that might be a bad sign, but for a contrarian, it may signal opportunity.


Of course you might be able to find a better stock than Expedia Group. So you may wish to see this free collection of other companies that have grown earnings strongly.

