Is It Too Late To Consider Expedia After Its 214% Three Year Surge?

• If you have been wondering whether Expedia Group is still a bargain after its huge run, you are not alone. This is exactly the moment when valuation matters most.
• The stock has climbed 8.8% over the last week, 6.0% over the past month and is now up 51.7% year to date, with a 53.6% gain over the last year and a 214.2% increase over three years.
• Some of this momentum has been fueled by ongoing strength in travel demand and Expedia's continued push into its B2B partnerships and loyalty ecosystem, which investors are starting to see as more durable growth drivers. There has also been growing attention on how online travel platforms like Expedia could benefit from structural shifts in consumer spending toward experiences and travel, even as broader macroeconomic worries persist.
• Right now, Expedia Group scores a 5/6 valuation check, which suggests it still screens as undervalued on most of our metrics. In the next sections we will unpack what that means across different valuation approaches, before finishing with a more holistic way to judge what the stock may be worth.

Expedia Group delivered 53.6% returns over the last year. See how this stacks up to the rest of the Hospitality industry.

Approach 1: Expedia Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects the cash Expedia Group could generate in the future and then discounts those cash flows back to today to estimate what the business is worth in $ right now.

Expedia is currently generating around $2.9 billion in free cash flow, and analysts expect this to keep growing over time. On Simply Wall St's 2 Stage Free Cash Flow to Equity model, analyst forecasts cover the next few years, with free cash flow projected to reach about $3.7 billion by 2029. Beyond that, cash flows are extrapolated using gradually slowing growth assumptions to reflect a more mature phase for the business.

When these future cash flows, including the long term terminal value, are discounted back to today, the model indicates a fair value of about $521.70 per share. Compared to the current share price, this implies the stock is trading at roughly a 46.1% discount, suggesting it screens as materially undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Expedia Group is undervalued by 46.1%. Track this in your watchlist or portfolio, or discover 904 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Expedia Group.

Approach 2: Expedia Group Price vs Earnings

For profitable companies like Expedia Group, the price to earnings ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. What counts as a normal or fair PE ratio tends to move around depending on how fast earnings are expected to grow and how risky or cyclical those earnings are. Faster growth and lower risk usually justify a higher multiple.

Expedia currently trades on a PE of about 24.8x, which is roughly in line with the broader Hospitality industry average of 24.8x, but below the 29.1x average for its peer group. Simply Wall St also calculates a Fair Ratio of around 29.8x for Expedia, a proprietary estimate of the PE multiple the company should trade on given its earnings growth outlook, profitability, industry position, market cap and risk profile.

This Fair Ratio is more informative than simple peer or industry comparisons because it adjusts for Expedia's specific fundamentals instead of assuming all travel companies deserve the same multiple. With the Fair Ratio of 29.8x sitting noticeably above the current 24.8x PE, the preferred multiple view points to Expedia Group still being undervalued.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Expedia Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St's Community page that lets you turn your view of Expedia Group into a story that connects assumptions about future revenue, earnings and margins to a specific financial forecast and a Fair Value you can compare to today’s price. A Narrative is simply your perspective written into the numbers, so instead of just accepting a single DCF or PE result, you decide what you believe about Expedia’s travel demand, AI tools, B2B momentum and competitive risks, and the platform translates that into projected financials and a Fair Value that updates dynamically as new news or earnings arrive. This makes it much easier to decide how you want to act on the stock, because you can see at a glance whether your Fair Value is above or below the current share price and how that compares to other investors, from those with more optimistic assumptions who might see Fair Value closer to $290 per share to more cautious investors who land nearer $168.

Do you think there's more to the story for Expedia Group? Head over to our Community to see what others are saying!

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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