Expedia Group: Impressive Profit Growth with Potential

For many investors, the idea of investing in companies that may not yet be profitable but have great stories to tell initially sounds appealing. However, reality shows that such bets rarely pay off, as Peter Lynch notes in his book 'One Up On Wall Street'. These loss-making companies are constantly racing against time to achieve financial stability, unnecessarily increasing the risk for investors. Therefore, those who are less risk-averse might be interested in more profitable and growth-oriented companies like Expedia Group. Even if the market considers the value of this company to be fair, the continued generation of profits provides a solid foundation for increasing long-term shareholder value. In the past three years, Expedia Group has made remarkable progress in earnings per share. Just last year, earnings per share rose from $5.64 to an impressive $8.31—an increase of 47% that likely leaves shareholders smiling favorably. A deeper look at the business metrics shows that Expedia Group has maintained stable EBIT margins while revenue grew by 6.6% to $13 billion. This consistency alongside revenue growth is highly positive. Expedia Group's capital structure also remains impressive. Although the company, with a market capitalization of $23 billion, is not marked by significant insider ownership, the management's investment in shares—valued at $1.2 billion—shows that decisions are strongly made in the interests of the shareholders. With clear profit growth in recent years on record, it is hardly surprising to observe the management’s engagement in their own shares. Expedia Group displays solid growth indicators that justify deeper analysis. However, one should not overlook the existing risks, which are highlighted with two warnings.