Priceline.com Inc (PCLN), Expedia Inc (EXPE): Which Travel Company Should You Invest In?

The company is growing at about 20% year-over-year yet has seen four consecutive years of margin declines. Last quarter margins did expand some, but with online advertising rates continuing to fall, I am not sure that it’s sustainable. In terms of valuation, the stock trade at 9 times sales, making it very expensive. Like I said, the stock often gets compared to the three above, but is very different in nature, and is also more expensive with more questions regarding its future performance.

Conclusion

Throughout my book, Taking Charge With Value Investing (McGraw-Hill, 2013), I try to stress the importance of unmeasured fundamentals, one being the comparison of companies in various industries. You can often search, compare, and then find value by seeing how companies stack up side-by-side.

In the online travel space, I think Priceline is a safe investment that is cheaper than many online based companies. Yet Expedia looks to be the clear value when stacked up side-by-side, with solid growth, room for margin improvement, and a large global world to expand its business. Orbitz is cheap, with a similar business model, and TripAdvisor is expensive, with a different business model. With that said, before making your next investment, in any industry, try comparing the simple metrics of those in the space. I think you’ll be surprised at the distinction in value that you will find.

The article Which Travel Company Should You Invest In? originally appeared on Fool.com is written by Brian Nichols.