Last update on 2024-06-06

Expedia Group (EXPE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Expedia Group (EXPE) 2023 Piotroski F-Score analysis: Final score 8/9. Detailed insights into profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

We're running Expedia Group (EXPE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Expedia Group (EXPE) has been evaluated using the Piotroski F-Score system to determine its financial health through several criteria. With a score of 8 out of 9, Expedia demonstrates strong profitability, liquidity, and operational efficiency. The company has a positive net income of $797 million and a cash flow from operations of $2.69 billion. Its return on assets (ROA) is growing, suggesting improved profitability, though it still lags behind the industry average. The operating cash flow is significantly higher than the net income, indicating good financial health. However, the leverage has slightly increased, and the current ratio has decreased, which is a potential area for concern. Additionally, the number of outstanding shares has decreased, suggesting favorable buyback activities. The gross margin and asset turnover ratios are also growing, indicating efficient use of assets and operational strength.

Insights for Value Investors Seeking Stable Income

Given Expedia Group's robust performance as evidenced by a high Piotroski score of 8, it appears to be a strong candidate for investors. The company has shown resilience and an ability to maintain profitability and efficiency despite recent challenges. However, potential investors should keep an eye on liquidity concerns and industry comparisons. Overall, Expedia seems to be a promising investment opportunity worth further consideration.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Expedia Group (EXPE)

Company has a positive net income?

Net income assesses a company's profitability, a cornerstone for evaluating financial health.

Expedia Group's net income for 2023 stands at $797 million, indicating profitability. Historically, the company has experienced fluctuations, including major losses in 2008 and 2020 due to significant operational downturns. The positive net income in recent years provides a favorable outlook, especially after the pandemic-related challenges.

Company has a positive cash flow?

Cash Flow from Operations (CFO) should always be checked to see if it's positive or negative as it's a key indicator of financial health.

For the year 2023, Expedia Group reported a positive Cash Flow from Operations (CFO) amounting to $2.69 billion. This is a critical factor for financial health, as it shows the company's capability to generate sufficient cash from its core business operations. The CFO numbers over the past years have shown significant fluctuations. For instance, in 2020, Expedia reported a substantially negative CFO of -$3.83 billion amidst the pandemic's severe impact on the travel industry. However, resilience followed, with CFOs rebounding to $3.748 billion in 2021 and $3.44 billion in 2022, before the slight decline to $2.69 billion in 2023. This volatility, while not unusual for industries sensitive to macroeconomic variables, is worth monitoring closely. Overall, the positive CFO for 2023 adds one point to Expedia Group's Piotroski score, indicating sound operational efficiency despite recent headwinds.

Return on Assets (ROA) are growing?

ROA (Return on Assets) measures the efficiency of a company's management in generating profit from its assets. An increase in ROA indicates improved profitability.

In 2023, Expedia Group's Return on Assets (ROA) was 0.0369, reflecting an increase from the ROA of 0.0163 in 2022. This increase signals a positive trend in the company’s ability to generate profits from its assets, therefore it scores 1 point for this criterion. However, it is essential to note that when compared to the industry median ROA, which stood at 0.8214 in 2023, Expedia's performance is significantly lower. This suggests that while the company is improving, it remains behind its industry peers in terms of asset efficiency.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) measures the cash generated by a company’s regular business operations, while Net Income is the profit after all expenses have been deducted from revenues. Comparing these two figures gives insight into the quality of the company's earnings.

Expedia Group's operating cash flow (OCF) for 2023 is $2.69 billion, which is significantly higher than its net income of $797 million. This results in an additional point for the Piotroski score, highlighting that the company’s core operations are generating strong cash flows, which is a positive indicator for overall financial health. Historically, Expedia has shown fluctuating OCF due to varied operational challenges. For example, in 2020, the OCF dipped to a staggering loss of $3.834 billion. However, the recovery in the subsequent years, with OCF values of $3.748 billion in 2021 and $3.44 billion in 2022 before settling at $2.69 billion in 2023, depicts resilience and a robust recovery post-pandemic.

Liquidity of Expedia Group (EXPE)

Leverage is declining?

Change in Leverage evaluates if a company's financial leverage has increased or decreased from the previous year.

For the Expedia Group, the leverage has increased slightly from 0.3039 in 2022 to 0.3034 in 2023, marking a negligible change. Historical data over the past 20 years indicate several fluctuations; particularly, leverage surged to 0.467 in 2020, possibly influenced by the impacts of the COVID-19 pandemic. Although the minimal increase in leverage from 2022 to 2023 doesn't significantly alter the company's risk profile, it is noteworthy that Expedia has managed to maintain relatively stable leverage compared to many peaks and troughs over the last two decades. As the leverage has increased rather than decreased, Expedia Group scores 0 points in the Piotroski Analysis for this criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its current assets.

The Current Ratio for Expedia Group (EXPE) has shown a slight decrease from 0.8156 in 2022 to 0.7833 in 2023. This downward movement indicates that the company's ability to cover its short-term liabilities with short-term assets has weakened, which might suggest potential liquidity issues. Comparatively, looking at data over the last 20 years, Expedia's current ratios oscillated significantly, and it occasionally dipped below its industry median. The industry median for 2023 stands at 1.0868, significantly higher than Expedia's latest number, further highlighting Expedia's lower relative liquidity position. Therefore, according to the Piotroski Analyses, the company earns 0 points for this criterion, reflecting a concern in the liquidity area's context.

Number of shares not diluted?

Outstanding shares represent the total shares of a company's stock that are owned by investors, including restricted shares. A decrease over time suggests that the company might be buying back shares, which can be favorable for investors.

In 2022, Expedia Group had 156,672,000 outstanding shares, which decreased to 144,967,000 shares in 2023. This reduction signifies a buyback strategy, which often signals that the company believes its stock is undervalued. Consequently, this trend is good, setting the criteria score to 1. Over the past 20 years, the trend shows varying levels of outstanding shares, with notable decreases observed in prior years as well, supportive of consistent buyback behavior.

Operating of Expedia Group (EXPE)

Cross Margin is growing?

Gross margin is a measure of financial health that shows the percentage of revenue that exceeds the cost of goods sold.

Expedia Group's gross margin increased to 0.8775 in 2023 from 0.858 in 2022. This increase is favorable, marking an improvement of approximately 2.3% year-over-year. Over the past 20 years, Expedia's gross margin has generally been higher than the industry median, signaling strong operational efficiency. Furthermore, both the level and trend of gross margin hold significant implications for the company’s ability to generate profit and sustain competitive advantage.

Asset Turnover Ratio is growing?

Compare the asset turnover ratios for two consecutive years and analyze the trend. Asset turnover is a key indicator of how efficiently a company uses its assets to generate sales.

The asset turnover for Expedia Group (EXPE) increased from 0.5413 in 2022 to 0.5944 in 2023. This represents an improvement in the company's efficiency in utilizing its assets to generate revenue. Historically, the company's asset turnover has experienced fluctuations, with a notable decline during economic uncertainties such as the global pandemic in 2020. The current rise is a positive signal, suggesting that the company is regaining its operational efficiency. Thus, for this criterion, EXPE earns 1 point.