Investment Thesis
Expedia exhibits strong operational cash generation ($3.7B FCF) and solid revenue growth (7.6% YoY), but this is severely undermined by a dangerously overleveraged balance sheet with 7.76x debt-to-equity and negative net profitability despite positive operating income. The company's thin equity base ($576M) combined with working capital stress (0.73x current ratio) creates significant financial fragility that could worsen in a travel downturn.
Strengths
- Strong free cash flow generation of $3.7B demonstrates underlying operational strength
- Positive 7.3% operating margin and 7.6% revenue growth indicate healthy core business
- Substantial cash position of $5.5B provides near-term liquidity buffer for debt service
Risks
- Extremely high leverage at 7.76x debt-to-equity with $4.5B long-term debt on only $576M equity creates distress risk
- Negative net profitability (-$6M net income, -1.0% ROE, -0.0% ROA) indicates company is not generating shareholder value
- Current ratio of 0.73x below 1.0 signals working capital stress and potential liquidity constraints in adverse conditions
Key Metrics to Watch
- Debt reduction trajectory and refinancing ability relative to leverage levels
- Return to positive net profitability and movement in net margin percentage
- Maintenance of operating cash flow and operating margin amid potential travel demand softening
Financial Metrics
Revenue
3.4B
Net Income
-6.0M
EPS (Diluted)
$-0.05
Free Cash Flow
3.7B
Total Assets
26.5B
Cash
5.5B
Profitability Ratios
Gross Margin
N/A
Operating Margin
7.3%
Net Margin
-0.2%
ROE
-1.0%
ROA
0.0%
FCF Margin
109.4%
Balance Sheet & Liquidity
Current Ratio
0.73x
Quick Ratio
0.73x
Debt/Equity
7.76x
Debt/Assets
0.0%
Interest Coverage
4.05x
Long-term Debt
4.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T10:33:56.634031 |
Data as of: 2026-03-31 |
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