Orbitz Worldwide, Inc. (OWW): Is This the Best Online Travel Company?

Priceline.com has seen very consistent improvement on the top line and red ink is nowhere to be found. Furthermore, Priceline.com sports a profit margin of 26.82%, whereas Expedia’s profit margin is 4.24%, and the profit margin for Orbitz is -18.82%. Therefore, it should come as no surprise that shorts are betting heavily against Orbitz.

The industry has seen a significant amount of consolidation, but Orbitz hasn’t been a major player. Unfortunately, Orbitz doesn’t have nearly as much cash available as Expedia or Priceline.com, which puts it at a significant disadvantage when it comes to inorganic growth.

While Orbitz Worldwide, Inc. (NYSE:OWW) might be showing improvements, it will be difficult for Orbitz to steal market share if it doesn’t have the capability of acquiring popular properties. And with the company focused on trying to deliver consistent profits, a major acquisition would be risky.

Company culture

The company culture for Orbitz is strong, which is a big positive. It indicates employees believe in the direction of the company. Happy employees also tend to produce more and make for happy customers. According to Glassdoor.com, Orbitz employees have rated their employer a 3.9 of 5 and 84% of employees would recommend the company to a friend. Several employees point out the low turnover rate and limited micromanaging as big positives.

Expedia employees rate their employer a 3.3 of 5, and 65% of employees would recommend the company to a friend. Therefore, Orbitz does outperform a peer in one area.

However, Priceline.com remains a dominating force, even in company culture. Priceline.com employees have rated their employer a 4.1 of 5, and 86% of employers would recommend the company to a friend.

Conclusion

Orbitz Worldwide, Inc. (NYSE:OWW) is a risky turnaround play. While the rewards could be high, it’s a dangerous game to play. That being the case, investing in best-of-breed companies for the long haul is recommended. Priceline.com is clearly the best option of this group. If you’re concerned about the broader market, then consider scaling into a position slowly.

The article Is This the Best Online Travel Company? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Priceline.com. The Motley Fool owns shares of Priceline.com. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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