For 4Q15, analysts are estimating Ctrip.com’s (CTRP) revenue to grow by 41%, slightly lower than the growth seen in the last three quarters. For 2015, analysts are thus expecting CTRP to report revenue growth of ~42% to $1.7 billion. This growth expectation is much higher than the 9%, 19%, and 20% revenue growth clocked by peers Priceline (PCLN), Expedia (EXPE), and TripAdvisor (TRIP), respectively, in 2015.
Investors should, however, remember that these peers are not strictly comparable due to the differences in the geographies they serve. Ctrip operates primarily in the fast-growing Chinese market.
Analysts expect revenue growth to continue in 2016. Sales are expected to grow by 59%, 66%, 71%, and 76% in 1Q16, 2Q16, 3Q16, and 4Q16, respectively. This would lead to full-year revenue growth of 65% for 2016, higher than the growth seen in 2015. Revenue growth is expected to fall to 43% in 2017.
It’s important to analyze analysts’ estimates before investing in a particular stock, as analysts’ estimates act as a proxy for what’s being priced into the stock. They often also serve as effective first screeners for investors.
Growing China travel industry
China’s growing middle-class population and increasing disposable income have led to a surge in the Chinese travel market, so much that it has now become one of the most important travel markets in the world. While China’s gross domestic product (or GDP) has reached 60% of US GDP, its leisure travel industry is just one-third the size of the US leisure travel industry.
In 1Q15, China’s online travel market grew by 50%. It’s expected to continue its high double-digit growth and reach a size of $75 billion by 2017. Ctrip.com is well placed to capture this growth.
CTRP is the fourth-largest holding of the EGShares Emerging Markets Consumer ETF (ECON), accounting for 4.3% of its portfolio.