Ctripcom International Ltd (NASDAQ:CTRP): Can Growth Justify Its November Share Price?

Ctripcom International Ltd (NASDAQ:CTRP) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of $26.99 is based on unrealistic expectations. Let’s look into this by assessing CTRP's expected growth over the next few years.

See our latest analysis for Ctrip.com International

How is CTRP going to perform in the future?

Ctrip.com International is poised for significantly high earnings growth in the near future. Expectations from 29 analysts are extremely positive with earnings per share estimated to surge from current levels of CN¥4.838 to CN¥7.589 over the next three years. This results in an annual growth rate of 40%, on average, which illustrates a highly optimistic outlook in the near term.

Is CTRP available at a good price after accounting for its growth?

Ctrip.com International is trading at price-to-earnings (PE) ratio of 38.64x, this tells us the stock is overvalued compared to the US market average ratio of 17.91x , and overvalued based on current earnings compared to the online retail industry average of 30.49x .

We understand CTRP seems to be overvalued based on its current earnings, compared to its industry peers. However, since Ctrip.com International is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 38.64x and expected year-on-year earnings growth of 40% give Ctrip.com International a low PEG ratio of 0.96x. This tells us that when we include its growth in our analysis Ctrip.com International's stock can be considered fairly valued , based on the fundamentals.

What this means for you:

CTRP's current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you're a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:

1. Financial Health: Are CTRP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Past Track Record: Has CTRP been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of CTRP's historicals for more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.