Thinking about what to do with Expedia Group stock right now? You are not alone. With shares recently closing just above the $205 mark, this travel tech giant is commanding attention from investors looking for both value and growth. Over the past year, Expedia Group has put up an impressive 55% total return, helping to erase memories of the industry's pandemic lows and rekindling excitement about what the future might hold.
In the shorter term, the story has been mixed. There has been a minor dip over the last week, but the stock climbed nearly 8.4% in the past month and is up almost 29% in the last quarter. Looking further back, Expedia Group has handsomely rewarded patient holders: a 90% total return over three years, more than doubling over five. This kind of performance makes many investors wonder if there is still value to unlock or if the best days are already in the rearview mirror.
Recent travel demand recovery and the ongoing shift to online bookings have been significant tailwinds, prompting analysts to not only bump up price targets but also take a hard look at how undervalued the stock might still be. In fact, when run through our multi-point valuation assessment, Expedia posts a solid five out of six value checks, which is an unusually strong showing for a tech-oriented consumer company. But numbers alone do not tell the whole story, so let us walk through the specifics of how Expedia Group's valuation stacks up and preview an even more insightful way to judge value at the end of this article.
Expedia Group delivered 55.0% returns over the last year. See how this stacks up to the rest of the Hospitality industry.Approach 1: Expedia Group Cash Flows
The Discounted Cash Flow (DCF) model is a classic valuation approach that works by projecting a company's future cash flows and then discounting them back to today’s value. This process aims to estimate what the business is really worth right now, based on those forward-looking figures.
For Expedia Group, the latest twelve months’ Free Cash Flow stands at $1.95 billion. Analysts expect steady growth over the coming decade, with forecasts showing Free Cash Flow reaching about $4.16 billion by 2035. These projections reflect ongoing momentum in travel demand and persistent gains from digital bookings.
When we run these numbers through the DCF model, Expedia Group’s intrinsic value comes out to approximately $415.53 per share. This assessment is made using a 2 Stage Free Cash Flow to Equity model, which considers both near-term and long-term prospects. With the actual stock price just above $205, the model suggests the shares are trading at a 50.6% discount to their fair value. This indicates the stock is significantly undervalued by this measure.
On this basis, Expedia Group’s current price leaves considerable room for upside, assuming the business continues on its current cash flow trajectory.
Result: UNDERVALUEDApproach 2: Expedia Group Price vs Earnings
The Price-to-Earnings (PE) ratio is a widely used metric for evaluating profitable companies, as it gives investors a quick sense of how much they are paying for each dollar of current earnings. When a business is solidly in the black, the PE ratio allows for meaningful comparisons, both to industry benchmarks and to the company’s own expected growth in profits.
Growth expectations and risk play a key role in shaping what counts as a “normal” or “fair” PE ratio for any firm. Higher growth prospects can justify higher PEs because investors are willing to pay more for future earnings. In contrast, more uncertainty or risk tends to push the ratio lower. Understanding these dynamics is crucial for determining whether a stock’s current valuation makes sense.
As of now, Expedia Group trades at a PE ratio of 22.8x. That is just about in line with the hospitality industry average of 23.2x and well below the average for similar peers, which sits at 30.6x. Looking deeper, Simply Wall St’s proprietary Fair Ratio, which takes into account factors like earnings growth, profit margins, and the company’s risk profile, comes in at 31.4x. With Expedia’s actual PE nearly 8.6x below the Fair Ratio, there appears to be significant value still on the table using this measure.
Result: UNDERVALUEDUpgrade Your Decision Making: Choose your Expedia Group Narrative
While traditional valuation tools like DCF and PE ratios give us useful benchmarks, investing is ultimately about connecting a company’s story to the numbers. That is where Narratives come in.
A Narrative is your perspective on a business’s future, linking your view of the company’s story with your own estimates of future revenue, profit margins, and ultimately what the business is worth. Narratives make it easy to turn your beliefs or research into a financial forecast and fair value in just a few clicks, right on the Simply Wall St platform with input and example Narratives from millions of investors.
When you build a Narrative, you see instantly if the estimated fair value suggests the stock is undervalued or overvalued compared to the current price. This empowers smarter buy and sell decisions personalized to your perspective. In addition, each Narrative remains dynamic. Whenever new information like earnings, news, or forecasts appear, your Narrative and fair value update automatically.
For Expedia Group, some investors are optimistic. Their Narrative sees AI-powered growth in Asian markets and recurring B2B revenue supporting a fair value as high as $290 per share. Others are wary of competition and platform challenges, with a more cautious Narrative fair value near $168 per share. Narratives help you frame your investment thinking, see where you line up compared to the market, and invest with greater clarity and confidence.
Do you think there's more to the story for Expedia Group? Create your own Narrative to let the Community know!This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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