Is It Time To Reassess Expedia Group (EXPE) After A 140.7% Three Year Return?

• If you are wondering whether Expedia Group at around US$226.51 is priced as a bargain or already reflects a lot of optimism, you are in the right place for a clear look at the numbers.
• The stock has had mixed recent returns, with a 4.3% decline over the last 7 days, a 5.0% gain over the past month, a 19.9% decline year to date, and a 35.8% return over the last year. The 3 year return sits at 140.7% and the 5 year return at 30.0%.
• Recent headlines around Expedia Group have focused on its role in online travel and changing consumer booking habits, which can influence expectations about future demand for its platform. At the same time, commentary has touched on competition among travel providers and online agencies, adding context to these share price moves.
• Simply Wall St currently assigns Expedia Group a valuation score of 3 out of 6. Next you will see how that score is built using different valuation approaches and how a broader way of thinking about value can add another layer to your analysis later in the article.

Expedia Group delivered 35.8% returns over the last year. See how this stacks up to the rest of the Hospitality industry.

Approach 1: Expedia Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and then discounting those back into today’s dollars.

For Expedia Group, the DCF used here is a 2 Stage Free Cash Flow to Equity model based on cash flow projections. The latest twelve month free cash flow is about $3.0b. Simply Wall St uses analyst estimates for the earlier years and then extends those projections further out. On this basis, free cash flow for 2030 is projected at $3.8b, with intermediate annual projections between 2026 and 2035 ranging from about $3.3b to $4.5b in undiscounted terms.

After discounting those future cash flows back to today, the model arrives at an estimated intrinsic value of $508.37 per share for Expedia Group, compared with the current share price of about $226.51. The difference between these figures suggests the shares are 55.4% below the model’s estimate of fair value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Expedia Group is undervalued by 55.4%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Expedia Group.

Approach 2: Expedia Group Price vs Earnings (P/E)

For a profitable company like Expedia Group, the P/E ratio is a useful way to relate what you are paying per share to the earnings the business is currently generating. Investors usually accept a higher P/E when they expect stronger earnings growth or see the business as relatively lower risk. Slower growth or higher risk tends to align with a lower, more conservative P/E.

Expedia Group currently trades on a P/E of 21.45x. That sits above the Hospitality industry average P/E of 20.29x and above the peer group average of 16.11x, suggesting the market is willing to pay more for each dollar of Expedia Group’s earnings than for many peers in its space.

Simply Wall St’s Fair Ratio for Expedia Group is 30.80x. This proprietary metric aims to estimate what a “normal” P/E could be after considering factors such as earnings growth, risk profile, profit margins, industry, and market capitalization, rather than relying only on basic peer or sector comparisons. Because it adjusts for these company specific features, it can give a more tailored view of how the current P/E stacks up. With a Fair Ratio of 30.80x compared with the present 21.45x, the shares screen as trading below this model based reference point.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Expedia Group Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced as your way of attaching a clear story about Expedia Group to the numbers. This links what you believe about its future revenue, earnings and margins to a forecast and then to a fair value that you can easily compare with today’s share price.

On Simply Wall St, Narratives sit inside the Community page and are used by millions of investors as a simple tool. They let you pick or create the story that best fits your view, whether that is closer to a more optimistic fair value such as about US$366.92 per share or a cautious one around US$225.00, and then see at a glance how that compares to the current price of about US$226.51.

Because Narratives update automatically when new earnings, guidance or news arrive, your chosen Expedia Group view stays current without manual recalculations. This can help you decide whether the gap between your Fair Value and the market price, whether that is near the higher or lower end of current community views, is wide enough to consider buying, holding, or selling according to your own rules.

For Expedia Group however we will make it really easy for you with previews of two leading Expedia Group Narratives:

🐂 Expedia Group Bull Case

Fair value in this narrative: US$345.94 per share

Gap to this fair value: about 34.5% below the narrative fair value based on the current price of about US$226.51

Assumed annual revenue growth: 6.45%

• Focuses on experience driven travel, where travelers care about flexible, authentic and personalised trips rather than just flights and hotels.
• Highlights Vrbo, longer stays and cross selling across brands as key ways to deepen engagement and support higher value bookings.
• Emphasises technology, data and AI tools as levers to improve margins through better personalisation, pricing and conversion.

🐻 Expedia Group Bear Case

Fair value in this narrative: US$225.00 per share

Gap to this fair value: about 0.7% above the narrative fair value based on the current price of about US$226.51

Assumed annual revenue growth: 6.11%

• Flags pressure from Google, direct hotel and airline bookings, and performance marketing as potential headwinds for margins and growth.
• Points to rising compliance and customer acquisition costs as factors that could weigh on profitability over time.
• Uses a lower assumed P/E and a fair value of US$225.00 to reflect the more cautious analyst cohort behind this view.

Between these two Narratives, you can quickly see how different assumptions about travel habits, competition and profitability translate into very different fair values for the same Expedia Group share price today.

Do you think there's more to the story for Expedia Group? Head over to our Community to see what others are saying!

This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.

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