Today we're going to take a look at the well-established Trip.com Group Limited (NASDAQ:TCOM). The company's stock led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Trip.com Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Trip.com Group still cheap?
According to my valuation model, the stock is currently overvalued by about 23%, trading at US$31.27 compared to my intrinsic value of $25.40. This means that the opportunity to buy Trip.com Group at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Trip.com Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Trip.com Group look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 58% over the next year, the near-term future seems bright for Trip.com Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in TCOM’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TCOM should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TCOM for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for TCOM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Trip.com Group as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Trip.com Group and you'll want to know about it.
If you are no longer interested in Trip.com Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. 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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