Trip.com, IBD Stock Of The Day, Eyes Buy Point Amid 90% Rally For China Travel Leader

Trip.com Group ADR

Trip.com Group ADR

TCOM

$1.86



2.77%



13%

IBD Stock Analysis

• Stock near 69.67 buy point
• TCOM EPS growth has slowed, but still solid
• Revenue growth picking up

Composite Rating

Industry Group Ranking

Emerging Pattern

Consolidation

* Not real-time data. All data shown was captured at
10:07AM EST on
12/06/2024.

Trip.com Group (TCOM) is the IBD Stock of the Day for Friday. Shares of China’s top online travel agency are ahead 91% this year, outrunning broader economic concerns in China.

On the stock market today, Trip.com stock rose 2.8% to close at 69.07. Shares are approaching a 69.67 consolidation pattern buy point.

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Founded 25 years ago, Trip.com offers online booking for hotels, air travel, tours and other travel services. The company’s business is focused in China, with brands that operate globally such as Trip.com and Skyscanner.

Trip.com: Q3 Sales Up 16%

China’s travel market started its recovery last year after Beijing lifted its strict Covid restrictions late in 2022. Trip.com’s adjusted earnings surged more than 800% last year on a per-share basis, while sales grew 114% to $7.3 billion.

Top and bottom line growth has slowed this year against harder comparisons. But Trip.com’s growth remains strong enough to impress Wall Street analysts.

For Trip.com’s September 2024 quarter, sales grew 16% in local currency to 15.9 billion yuan. Adjusted earnings grew 20% to 8.75 yuan per share, the company announced on Nov. 18.

Trip.com Executive Chairman James Liang said in a news release with the earnings results that “both domestic and international travel exhibited robust growth.”

TCOM stock gained 3% following the report.

Deutsche Bank analyst Leo Chiang reiterated a buy rating on Trip.com stock following the Q3 report.

“Travel sentiment in China remained resilient thanks to growing consumer confidence, leading to a healthy performance in both the domestic and cross-border travel business,” Chiang wrote. “International travel also sustained strong growth momentum during the quarter.”

Analysts are bullish on Trip.com overall, with 95% of the 44 analysts covering the stock rating it a buy, according to FactSet.

Trip.com Stock Up 93% In 2024

There are risks, however, as it has been an uneven year for China stocks. There is ongoing concern about slowing consumer spending in the world’s second-largest economy. Chinese companies that trade in the U.S. saw their shares rally in late September, as the government stepped up efforts to stimulate growth. But investors are still watching for greater clarity on the measure.

Investors are also weighing the impact of Donald Trump’s U.S. presidential victory, with Trump pledging to place further tariffs on China during his second term. Travel is likely to be less affected by tariffs on goods than most other sectors but could still feel an impact if the broader economy weakens.

Still, Trip.com has managed to outrun struggles for the broader Chinese economy so far. Similarly, U.S.-listed shares of China-focused hotel operator Atour Lifestyle Holdings (ATAT) have had a strong 2024.

Trip.com stock has an IBD Composite Rating of 97 out of 99, according to IBD Stock Checkup. IBD’s Composite Rating combines fundamental and technical metrics for an overview of a stock’s strengths. The best-rated growth stocks have a Composite Rating of 90 or better.

The company trails only India-focused online travel agency MakeMyTrip (MMYT) for top rating in the Leisure-Travel Booking category tracked by Investor’s Business Daily.

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