With shares of Ctrip.com International Ltd. (NASDAQ:CTRP) trading at around $20.73, is CTRP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Investors are responding in positive fashion to Ctrip’s earnings results. Q4 revenue came in at $177 million, which was a 1 percent increase year-over-year. Diluted EPS was $0.22 versus $0.27 for the same quarter last year. Gross Margin was 74 percent versus 76 percent for the same quarter last year. Operating Margin was 11 percent versus 25 percent for the same quarter last year. Income from operations was down 48 percent year-over-year. So far, this doesn’t look like the kind of report that would send a stock 5 percent higher. Let’s keep looking.
FY2012 revenue was $668 million, which was a 19 percent increase over 2011. Diluted EPS was $0.80 versus $1.12 in 2011. FY2012 Gross Margin was 75 percent versus 77 percent for 2011. Operating Margin was 16 percent versus 30 percent in 2011. Income from operations was down 39 percent compared to 2011. The only bright spot here is revenue, which should be the most important factor, but it’s still not the kind of report to move a stock 5 percent higher.
The answer, of course, is strong guidance. Ctrip expects strong revenue growth at a year-on-year rate of 15.20 percent. Other comments made by management were vague. In summation, Ctrip has enhanced its leadership in the online travel market for China, and the company will continue to invest in customer services, product offerings, brand recognition, and technology development.
Let’s take a look at some important numbers prior to forming an opinion on the stock…