Can You Profit From Travel?

The world of online travel is fierce.  This week we’re taking a look at one of the larger and more popular online travel companies.  They’ve had some big court cases fall their way recently.  As a result, many investors are looking more closely at the business… and the stock.  Give them a close look yourself.

The next exciting company to put on your radar is Orbitz Worldwide (OWW).

 

QUICK FACTS

Ticker                                      OWW

Industry                                   Travel

Recent Price                            $2.37

Market Cap                              $243 m

Shares Outstanding                  102.5 m

Average Volume                       103,756

Dividend Yield                           N/A

Website                                   www.corp.orbitz.com

 

COMPANY DESCRIPTION

Last year Orbitz Worldwide (OWW) spent $217 million on marketing… so almost everybody in the world knows who they are!   In case you don’t own a TV… Orbitz is an online travel company.  Customers go online and book airline travel, hotel rooms, rental cars… anything they need for a business or vacation trip!

The company was founded in 2000 by a handful of major airlines looking to cash in on the growing demand for self-made travel plans.

The company owns a bunch of destination websites including cheaptickets.com, ebookers.com, and hotelclub.com.  All are focused on the travel sector.

 

FINANCIALS

Now, the economy hasn’t been the best recently.  Unemployment is high, and many people are struggling day to day.  As a result, nobody has money for travel.

The travel industry is one of the hardest hit by the last recession.

In early May the company announced first quarter results.  Gross bookings hit $2.9 billion up about 2% from the year earlier.  Net revenue for OWW was $184 million down about 1% and the company showed a net loss of $10 million… that’s more than double the loss from a year earlier!

These numbers don’t look good.

Management knows it… that’s why they came right out and said “We’re not satisfied with our overall Q1 results…”  CEO Barney Harford clearly has his work cut out for him.

Management expects next quarter revenue to be in a range of $194 to $200 million.  I can’t wait to see what they do.

 

KEY METRICS ANALYSIS

Trailing P/E                                         N/A

Price / Sales                                       0.3

Return on Assets                                2.5%

Insider ownership                                1.0%

Short Ratio                                         7.3x

Current Ratio                                      0.5x

Total Debt To Equity                            266.2x

 

RECENT EVENTS

OWW recently won a huge court case against American Airlines who tried to pull their flights off of Orbitz’s system.  It was part of the reason sales numbers were down.  The stock jumped higher on the news.

In other news, OWW recently scooped up the lucrative contract to service Eurostar, the high speed train that runs from London to Paris.  They stole the business from their key competitor Expedia.

 

MANAGEMENT TEAM

Barney Harford – CEO

Russel Hammer – CFO & Sr. Vice president

Samuel M Fulton – Sr. Vice President

Roger Liew – Sr. Vice President & CTO

 

STOCK ANALYSIS

 

 

 

 

 

 

 

Charts courtesy of stockcharts.com

 

Despite seeing an uptick on the American Airlines court case news, the stock is still in a downdraft.  Orbitz is still trading below both the 200-day and well below the 50-day moving average.

OWW’s 52-week low was $2.06 and the 52-week high was $7.01.  Right now the stock is trading at $2.37.  The 50-day moving average is near $2.76 a share and the 200-day moving average is at $4.59.  The company has a market cap of $243 million and 102.6 million shares outstanding.

 

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