Insights

Travel Is Back and These 2 Stocks Are Celebrating

Coming into Monday’s session, it looked like the stock market would continue the plunge it had suffered late last week, which led to April being the worst month for the market since the meltdown at the beginning of the pandemic. However, even though the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were all down 1% to 2% at their worst levels of the session, late-day buying helped bring all three indexes to gains.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.26%

+84

S&P 500

+0.57%

+23

Nasdaq

+1.63%

+201

Data source: Yahoo! Finance.
Travel companies have taken it on the chin over the past couple of years, and many of them have been waiting impatiently for conditions in the industry to improve. Finally, investors saw some signs that a recovery might be here, as both Expedia Group (NASDAQ: EXPE) and Avis Budget Group (NASDAQ: CAR) issued encouraging financial reports that investors hope will lead to much more in the near future.
1. Expedia takes off
Shares of Expedia Group were up almost 2% in after-hours trading. The online travel platform provider pointed to improving trends in the industry, albeit after weathering worries early in the first quarter of 2022 stemming from the rise of the coronavirus omicron variant.
Image source: Getty Images.

Expedia’s gross bookings came in at $24.4 billion. That was up 58% from year-ago levels, although  it remained 17% lower than pre-pandemic levels in the first quarter of 2019. Revenue soared 81% to $2.25 billion. Expedia still lost money, but adjusted net losses of $74 million weren’t as dire as some had expected and narrowed considerably from year-earlier amounts. Adjusted pre-tax operating losses were consistent with where they were three years earlier, showing the success Expedia has had controlling its costs even with weak revenue.
The sales strength came across the board. Lodging revenue was up 78%, constituting the majority of Expedia’s overall top line. However, air-related sales climbed 50% year over year, and Expedia also had big success boosting its take from advertising and media.
It’s too early to sound the all-clear for Expedia just yet, with the war in Ukraine also weighing on international travel. However, investors are pleased to see consistent improvement and hope that favorable trends in the travel industry will continue.
2. Avis revs up
Shares of Avis Budget Group were much stronger, rising nearly 7% after hours. The  car rental giant  has benefited from a tight market as travelers return to the road and need vehicles to get where they want to go.
Avis Budget saw dramatic financial strength in the first quarter of 2022. Revenue jumped 77% to $2.43 billion, with the figure exceeding by 27% what the rental car company brought in during the first quarter of 2019 before the pandemic. Utilization rates returned to pre-pandemic levels, and Avis Budget reversed a year-ago loss with a massive $527 million profit. Adjusted earnings came in at $9.99 per share.
CEO Joe Ferraro also mentioned the impact that the omicron variant had early in the period. However, the Avis executive remains comfortable with the company’s position, with ample liquidity and a set of debt obligations that it is confident it will be able to meet.
Heavy demand for vehicles might not be permanent, especially if disruptions in supply chains affecting the auto industry eventually reduce demand for used vehicles. For now, though, Avis Budget is enjoying big tailwinds, and it hopes to keep reaping the rewards as 2022 continues.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

Coming into Monday’s session, it looked like the stock market would continue the plunge it had suffered late last week, which led to April being the worst month for the market since the meltdown at the beginning of the pandemic. However, even though the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were all down 1% to 2% at their worst levels of the session, late-day buying helped bring all three indexes to gains.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.26%

+84

S&P 500

+0.57%

+23

Nasdaq

+1.63%

+201

Data source: Yahoo! Finance.

Travel companies have taken it on the chin over the past couple of years, and many of them have been waiting impatiently for conditions in the industry to improve. Finally, investors saw some signs that a recovery might be here, as both Expedia Group (NASDAQ: EXPE) and Avis Budget Group (NASDAQ: CAR) issued encouraging financial reports that investors hope will lead to much more in the near future.

1. Expedia takes off

Shares of Expedia Group were up almost 2% in after-hours trading. The online travel platform provider pointed to improving trends in the industry, albeit after weathering worries early in the first quarter of 2022 stemming from the rise of the coronavirus omicron variant.

Image source: Getty Images.

Expedia’s gross bookings came in at $24.4 billion. That was up 58% from year-ago levels, although  it remained 17% lower than pre-pandemic levels in the first quarter of 2019. Revenue soared 81% to $2.25 billion. Expedia still lost money, but adjusted net losses of $74 million weren’t as dire as some had expected and narrowed considerably from year-earlier amounts. Adjusted pre-tax operating losses were consistent with where they were three years earlier, showing the success Expedia has had controlling its costs even with weak revenue.

The sales strength came across the board. Lodging revenue was up 78%, constituting the majority of Expedia’s overall top line. However, air-related sales climbed 50% year over year, and Expedia also had big success boosting its take from advertising and media.

It’s too early to sound the all-clear for Expedia just yet, with the war in Ukraine also weighing on international travel. However, investors are pleased to see consistent improvement and hope that favorable trends in the travel industry will continue.

2. Avis revs up

Shares of Avis Budget Group were much stronger, rising nearly 7% after hours. The  car rental giant  has benefited from a tight market as travelers return to the road and need vehicles to get where they want to go.

Avis Budget saw dramatic financial strength in the first quarter of 2022. Revenue jumped 77% to $2.43 billion, with the figure exceeding by 27% what the rental car company brought in during the first quarter of 2019 before the pandemic. Utilization rates returned to pre-pandemic levels, and Avis Budget reversed a year-ago loss with a massive $527 million profit. Adjusted earnings came in at $9.99 per share.

CEO Joe Ferraro also mentioned the impact that the omicron variant had early in the period. However, the Avis executive remains comfortable with the company’s position, with ample liquidity and a set of debt obligations that it is confident it will be able to meet.

Heavy demand for vehicles might not be permanent, especially if disruptions in supply chains affecting the auto industry eventually reduce demand for used vehicles. For now, though, Avis Budget is enjoying big tailwinds, and it hopes to keep reaping the rewards as 2022 continues.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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