Homeaway (AWAY) is going through a slow growth period where profit growth is expected to be 12% on average the next four quarters. The stock has a P/E of 50. I’d stay away from HomeAway at this level.
AWAY’s listing growth is being hurt right now because its giving property owners the ability to put several listings into one listing. The company is also rolling out a pay-per-booking program this quarter, which will additionally hurt sales (but the industry is moving to this, so AWAY has to as well). Here’s the differences between pay-per-booking and pay-per-listing:
- Pay-Per-Listing — What the company uses now. Property owners pay HomeAway when they put a proptery up for listing. They have to subscribe to be listed.
- Pay-Per-Booking — A new option to be available this quarter. Property owners get to add rental properties to the site for free, and pay when the property is booked.
Under the new program, people can try throwing listings up, and if the proptery doesn’t rent the owner won’t be out much (if anything).
One Year Chart
Sales rose 21% last quarter, and profits increased a solid 33%. Still, Estimates look bad. Especially considering the stock’s lofty 50 P/E.
AWAY is so unattractive at this price that I shouldn’t even write about it. But I wanted to put my thoughts on paper for later. HomeAway is a leading growth stock, and its one I will probably want to buy at a later time. I want to have my notes down so I can revisit them later.
Fair Value
This stock is worth 35 times earnings. That’s $21 a share right now. The stock’s selling for $30.
Sharek’s Take
HomeAway’s profit growth is expected to slow with the new pay-for-booking program — and with a P/E of 50 there’s a lot of downside risk. Still, this is a market leader in a new area, and those stocks often are good ones. I’ll keep AWAY on my radar, but stay away from it now.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
