| Stock (Symbol) | Stock Price | |||||||||||||||||||||||||||||
Ctrip.com (CTRP) |
$47 |
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| Data is as of | Expected to Report | Sector | ||||||||||||||||||||||||||||
September 28, 2010 |
Nov 8 |
Technology |
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| Company Description | ||||||||||||||||||||||||||||||
| Ctrip.Com International Ltd. The Group’s principal activity is providing travel services for hotel accommodations, airline tickets and packaged tours in the People’s Republic of China. It aggregates information on hotels and flights and enables its customers to make informed and cost-effective hotel and flight bookings. It also sells packaged tours that include transportation and accommodations, as well as guided tours in some instances. | ||||||||||||||||||||||||||||||
| Sharek’s Take | ||||||||||||||||||||||||||||||
 I’m a big fan of Ctrip. The company has fantastic growth opportunity in China as that countries travel industry is underdeveloped. Mirae Asset predicts:
We estimate China’s airline, auto and railroad travel to be in stages of growth similar what were seen in the United States in 1952, 1911 and 1940 respectively. Only 12% of Chinese have the experience of flying, compared to Americans who fly twice per year. Despite breathtaking growth of economy-priced hotel chains, as yet they only take up 25% of all hotel rooms, compared with 70% in the US. Furthermore, CTRP’s affiliated hotel chains control 26% of the economy hotel chain segment. The next largest chain controls 3% of economy hotel rooms.
I’m loving this stock over the long-haul, but feel the stock’s an expensive trip right now. Here’s why: |
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| One-Year Chart | ||||||||||||||||||||||||||||||
| CTRP’s P/E is 51 and profits grew 35% last quarter. Estimates for the next two quarters show profit growth of around 20% ahead. 51 times earnings for 20A% growth is expensive. Yes, CTRP should be able to grow around 40% in the future ( I think the Long Term Growth Rate of 30% is too low), but a P/E of 51 is about as high as I can see this stock getting. |  |
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| Profit Growth | Earnings Table | |||||||||||||||||||||||||||||
| Profits grew 35% last quarter and revenue rose 46%. Hotel bookings and airline business both grew more than 40% — that’s why I think this stock can grow profits 40% long-term. |  |
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| Beat the Street | ||||||||||||||||||||||||||||||
| CTRP beat by 2 cents but those estimates were reduced a little in prior quarters. | ||||||||||||||||||||||||||||||
| Annual Profit Estimates | ||||||||||||||||||||||||||||||
| 2010 and 2011 estimates stayed exactly the same. Without increasing estimates, a 51 P/E for 20-30% growth is high. | ||||||||||||||||||||||||||||||
| Future Quarters | ||||||||||||||||||||||||||||||
| Profit growth is expected to average 25% the next four quarters — and these estimates didn’t really go up. | ||||||||||||||||||||||||||||||
| Fair Value | ||||||||||||||||||||||||||||||
| I think this company is worth 45 times earnings. CTRP is a $51 stock that I think is fairly valued at $42. |
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| Ten-Year Chart | ||||||||||||||||||||||||||||||
| The ten-year chart shows why you can’t sell CTRP — even when its high. Notice the stock is at an all-time high, so buy-and-hold left everyone with a profit. The spill in 2008 was fear from the economic disaster.I first purchased CTRP on 12/1/04 at $7. The financial collapse combined with a recession caused me to sell the shares on 9/18/08 at $20. I bought CTRP again on 12/28/09 for $37. |  |
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| Power Ranking | Bottom Line | |||||||||||||||||||||||||||||
Growth Portfolio
15 of 17 |
Overall, this was a good-not-great performance put in by CTRP last quarter. I feel as though the travel industry is hot and since other travel stocks like Priceline.com (PCLN)are hot other travel stocks are rising too.51 times earnings is a lot to pay for a company expected to grow 25% or so during the next year. Although I think this trip is high, it could go higher. CTRP is not a good trading stock since it rarely pulls back. I think smart money managers know this company can grow profits 40% a year long-term and that’s why it always stays expensive. CTRP is the 15th best stock in the 17 stock Growth Portfolio due to lack of upside.This stock is not part of the Aggressive Growth Portfolio because CTRP isn’t beating estimates, isn’t guiding higher, and is an expensive trip. | |||||||||||||||||||||||||||||
Aggressive Growth Portfolio
N/A |
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