EXPE
EXPE
Accumulate 2026-05-09
Model
DCF
Price at Report
$229.98
Base IV
$299.30
Bear IV
$215.29
Bull IV
$423.59
Entry Zone: 185-225 · Sell Above: 310
Bore Family Office
Valuation Report — Expedia Group (EXPE) • May 9, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 12.00% • Current Price: $229.98
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Expedia Group is one of the world's largest online travel platforms, operating a portfolio of consumer brands (Expedia, Hotels.com, Vrbo, Orbitz, Travelocity, Hotwire) and a fast-growing B2B/technology services division. Founded in 1996 as a Microsoft spin-off and now led by CEO Ariane Gorin (since 2024), the company connects travelers with hotels, airlines, car rentals, and vacation rentals through both direct-to-consumer platforms and partner integrations via its Rapid API. The company has aggressively restructured since 2023, consolidating brands onto a single tech stack, reducing headcount, and launching a $5B share repurchase program. Q1 2026 results beat expectations with 15% revenue growth and the highest Q1 EBITDA margin in 15 years (15.8%), driven by B2B growth (+22%), strong consumer bookings (+10%), and operating leverage. Expedia also partnered with Uber (exclusive hotel partner) and is investing heavily in AI-driven personalization and customer service automation.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| B2B (Rapid API, TAAP, Template) | $4,800M | 33% | +22.0% | — | Fastest-growing segment; Rapid API driving gains |
| Consumer (Expedia, Hotels.com, Vrbo) | $8,500M | 58% | +8.0% | — | Core marketplace; loyalty members growing mid-single digits |
| Trivago & Other | $1,430M | 9% | -2.0% | — | Declining; metasearch pressure |
| Blended Growth Rate | — | 100% | +11.7% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 10.2% | 8–12% adequate |
| FCF Margin | 21.1% | ≥10% strong |
| Debt / EBITDA | 1.7x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $8,598 | $11,667 | $12,839 | $13,691 | $14,733 |
| Rev YoY Growth | — | +35.7% | +10.0% | +6.6% | +7.6% |
| Gross Margin | 82.3% | 85.8% | 87.7% | 89.5% | 90.1% |
| EBITDA ($M) | $1,000 | $1,877 | $1,840 | $2,157 | $2,758 |
| EBITDA Margin | 11.6% | 16.1% | 14.3% | 15.8% | 18.7% |
| Operating Income ($M) | $186 | $1,085 | $1,033 | $1,319 | $1,871 |
| Operating Margin | 2.2% | 9.3% | 8.0% | 9.6% | 12.7% |
| Net Income ($M) | $-269 | $352 | $797 | $1,234 | $1,294 |
| Net Margin | -3.1% | 3.0% | 6.2% | 9.0% | 8.8% |
| EPS (diluted) | $-1.80 | $2.17 | $5.31 | $8.95 | $9.81 |
| Free Cash Flow ($M) | $3,075 | $2,778 | $1,844 | $2,329 | $3,110 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $1.600 |
| Total Debt ($M) | $8,810 | $6,552 | $6,253 | $6,266 | $4,706 |
💹 Capital Return & Share Count Analysis
Net Share Change
-12.0% (2021→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 150.0M | — | — | — |
| 2022 | 162.0M | +8.0% | — | — |
| 2023 | 150.2M | -7.3% | — | — |
| 2024 | 137.9M | -8.2% | — | — |
| 2025 | 132.0M | -4.3% | — | — |
📈 DCF Scenarios
$215
🔴 Bear
$299
📊 Base
$424
🚀 Bull
$229.98
Current Price
$276
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.5% | 1.5% | 2.0% | 14.00% | $215 | ▼6.4% |
| 📊 Base | 4.5% | 3.0% | 2.5% | 12.00% | $299 | ▲30.1% |
| 🚀 Bull | 7.0% | 4.5% | 3.0% | 10.60% | $424 | ▲84.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.5% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.19B | $2.80B | $2.80B |
| Year 2 ✦ | Stage 1 | $3.27B | $2.51B | $5.31B |
| Year 3 ✦ | Stage 1 | $3.35B | $2.26B | $7.57B |
| Year 4 ✦ | Stage 1 | $3.43B | $2.03B | $9.60B |
| Year 5 ✦ | Stage 1 | $3.51B | $1.82B | $11.42B |
| Year 6 | Stage 2 | $3.56B | $1.62B | $13.05B |
| Year 7 | Stage 2 | $3.62B | $1.45B | $14.49B |
| Year 8 | Stage 2 | $3.67B | $1.29B | $15.78B |
| Year 9 | Stage 2 | $3.73B | $1.15B | $16.92B |
| Year 10 | Stage 2 | $3.78B | $1.02B | $17.94B |
| Terminal | — | TV=$32.1B | PV(TV)=$8.7B (33% of EV) | EV=$26.6B |
| Intrinsic Value | — | — | EV $26.6B − Net Debt → Equity / Shares | $215 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (14.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $32.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $8.7B). Enterprise Value = PV of FCFs ($17.9B) + PV of TV ($8.7B) = $26.6B. Subtracting net debt gives equity value of $26.4B, divided by shares outstanding = $215 per share.
Base Scenario
Stage 1: 4.5% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.25B | $2.90B | $2.90B |
| Year 2 ✦ | Stage 1 | $3.40B | $2.71B | $5.61B |
| Year 3 ✦ | Stage 1 | $3.55B | $2.53B | $8.13B |
| Year 4 ✦ | Stage 1 | $3.71B | $2.36B | $10.49B |
| Year 5 ✦ | Stage 1 | $3.88B | $2.20B | $12.69B |
| Year 6 | Stage 2 | $3.99B | $2.02B | $14.71B |
| Year 7 | Stage 2 | $4.11B | $1.86B | $16.57B |
| Year 8 | Stage 2 | $4.23B | $1.71B | $18.28B |
| Year 9 | Stage 2 | $4.36B | $1.57B | $19.85B |
| Year 10 | Stage 2 | $4.49B | $1.45B | $21.30B |
| Terminal | — | TV=$48.5B | PV(TV)=$15.6B (42% of EV) | EV=$36.9B |
| Intrinsic Value | — | — | EV $36.9B − Net Debt → Equity / Shares | $299 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (12.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $48.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $15.6B). Enterprise Value = PV of FCFs ($21.3B) + PV of TV ($15.6B) = $36.9B. Subtracting net debt gives equity value of $36.7B, divided by shares outstanding = $299 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 7.0% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.33B | $3.01B | $3.01B |
| Year 2 ✦ | Stage 1 | $3.56B | $2.91B | $5.92B |
| Year 3 ✦ | Stage 1 | $3.81B | $2.82B | $8.73B |
| Year 4 ✦ | Stage 1 | $4.08B | $2.72B | $11.46B |
| Year 5 ✦ | Stage 1 | $4.36B | $2.64B | $14.09B |
| Year 6 | Stage 2 | $4.56B | $2.49B | $16.58B |
| Year 7 | Stage 2 | $4.76B | $2.35B | $18.94B |
| Year 8 | Stage 2 | $4.98B | $2.22B | $21.16B |
| Year 9 | Stage 2 | $5.20B | $2.10B | $23.26B |
| Year 10 | Stage 2 | $5.43B | $1.98B | $25.24B |
| Terminal | — | TV=$73.7B | PV(TV)=$26.9B (52% of EV) | EV=$52.1B |
| Intrinsic Value | — | — | EV $52.1B − Net Debt → Equity / Shares | $424 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.60%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $73.7B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $26.9B). Enterprise Value = PV of FCFs ($25.2B) + PV of TV ($26.9B) = $52.1B. Subtracting net debt gives equity value of $51.9B, divided by shares outstanding = $424 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 10.0% | $357 | $368 | $381 | $396 | $413 |
| 10.5% | $336 | $346 | $357 | $369 | $384 |
| 11.0% | $318 | $326 | $336 | $346 | $358 |
| 11.5% | $301 | $308 | $316 | $325 | $336 |
| 12.0% | $286 | $292 | $299 | $307 | $316 |
| 12.5% | $272 | $278 | $284 | $291 | $298 |
| 13.0% | $260 | $265 | $270 | $276 | $282 |
| 13.5% | $249 | $253 | $257 | $263 | $268 |
| 14.0% | $238 | $242 | $246 | $250 | $255 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Booking Holdings | BKNG | 23.5x | 14.2x | 19.1x | 0.6% | Global OTA leader; premium multiple |
| Airbnb | ABNB | 24.8x | 16.5x | 22.3x | 0.0% | Alt lodging pure-play; higher growth |
| Trip.com | TCOM | 18.2x | 11.8x | 15.6x | 1.2% | China-centric OTA; lower valuation |
| MakeMyTrip | MMYT | 32.1x | 22.4x | 28.5x | 0.0% | India OTA; hyper-growth premium |
| Expedia Group | EXPE | 21.8x | 13.0x | 8.7x | 0.8% | Deep value on P/FCF; buyback catalyst |
| EXPE 5-yr avg | — | 25.0x | 14.5x | 16.2x | — | Below historical avg on every metric |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.920 |
| Current Yield | 0.83% |
| Consecutive Growth Years | 2 |
| 1-yr DPS CAGR | +20.0% |
| 3-yr DPS CAGR | N/A |
| 5-yr DPS CAGR | N/A |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 14.7% |
| FCF Payout Ratio | 8.1% |
| Sustainability Verdict | Safe |
EXPE reinstated its dividend in 2025 at $0.40/qtr and raised it to $0.48/qtr in 2026 (20% increase). Payout ratio is just 14.7% of EPS and 8% of FCF, so the dividend is extremely safe. However, EXPE is primarily a buyback story — the company repurchased $2.33B in stock in FY2025 (4.4% buyback yield) and authorized a new $5B repurchase program. Total shareholder yield (dividend + buyback) exceeds 5%. The dividend alone is not meaningful for valuation — this is a DCF name, not a DDM name.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $-1.80 | — | — | — | Actual |
| 2022 | $2.17 | — | — | — | Actual |
| 2023 | $5.31 | — | — | — | Actual |
| 2024 | $8.95 | — | — | — | Actual |
| 2025 | $9.81 | — | — | — | Actual |
| 2026 | $15.07 | $19.62 | $25.29 | 40 | Estimate |
| 2027 | $16.91 | $23.18 | $32.01 | 36 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $8.6B | — | — | — | Actual |
| 2022 | $11.7B | — | — | — | Actual |
| 2023 | $12.8B | — | — | — | Actual |
| 2024 | $13.7B | — | — | — | Actual |
| 2025 | $14.7B | — | — | — | Actual |
| 2026 | $15.4B | $16.3B | $17.3B | 40 | Estimate |
| 2027 | $16.3B | $17.4B | $19.1B | 36 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Naved Khan | B. Riley Securities | Strong Buy | $350 | +52.2% |
| Jake Fuller | BTIG | Strong Buy | $330 | +43.5% |
| Ken Gawrelski | Wells Fargo | Hold | $307 | +33.5% |
| John Colantuoni | Jefferies | Strong Buy | $300 | +30.4% |
| Brian Nowak | Morgan Stanley | Hold | $290 | +26.1% |
| Stephen Ju | UBS | Hold | $262 | +13.9% |
| Scott Devitt | Wedbush | Hold | $260 | +13.1% |
| Brian Pitz | BMO Capital | Hold | $255 | +10.9% |
| Greg Miller | Truist Securities | Hold | $246 | +7.0% |
| Thomas Champion | Piper Sandler | Hold | $245 | +6.5% |
| Lloyd Walmsley | Mizuho | Hold | $245 | +6.5% |
💡 Investment Thesis
Bull Case
- B2B is the growth engine: Rapid API growing 22%+ YoY, now contributing 33% of revenue. The Uber partnership (exclusive hotel partner) is a new distribution channel with zero marginal cost. B2B margins at 22.7% prove this is high-quality, scalable revenue.
- Operating leverage inflection: Q1 2026 EBITDA margin of 15.8% is the highest Q1 in 15 years. FY2025 operating margin of 12.7% is up from 9.6% in FY2024 and just 2.2% in FY2021. The tech stack consolidation is driving real cost savings — $100M+ in annualized savings by end of 2025.
- Massive buyback catalyst: EXPE has repurchased 49M shares since 2022 (24% reduction net of dilution). A new $5B authorization continues this at pace. FY2025 EPS growth of 33.96% includes significant buyback amplification (net income only grew 4.86% on a GAAP basis).
- P/FCF at 8.7x is historically cheap: TTM FCF of $4.1B implies a 7.1% FCF yield at current market cap. EXPE has never been this cheap on FCF basis since the post-COVID recovery.
- AI monetization potential: Answer engine optimization is now EXPE's fastest-growing channel. 30%+ of self-service interactions are AI-powered. This is a real efficiency gain, not just hype.
Bear Case
- Macro sensitivity: Travel is cyclical and discretionary. The Middle East conflict and Mexico travel advisories already caused a ~5-point bookings disruption in March. A recession would hit hard.
- Competition from Booking and Airbnb: BKNG commands a premium multiple and has superior global scale. ABNB is taking share in alternative lodging (EXPE's Vrbo is losing ground).
- Negative tangible book value: -$6.4B tangible BV per share reflects heavy goodwill from acquisitions. If the franchise weakens, there's no asset floor.
- Low dividend yield limits income buyers: At 0.83%, the dividend is token. EXPE is not a dividend stock — it's a capital return story dependent on buyback sustainability.
Base Case Assumptions
- Revenue grows 6-9% in FY2026 (in line with guidance), moderating to 3-4% by Year 5
- FCF margins expand from 21% to 23-24% as operating leverage continues
- Buybacks continue at $2B+/year, reducing share count by ~3-5% annually
- WACC of 12% reflects cyclical travel risk with a sector premium over CAPM
- B2B remains the growth driver but moderates from 22% to 12-15% as it scales
👔 Management Quality & Culture
CEO: Ariane Gorin · Tenure: Since 2024 (~2 yrs)
Net Insider Buys (12m)
+55,643 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present · Comp reference: $25M
CEO Background & Track Record
Who is the CEO of Expedia in 2026? Ariane Gorin's Bio | Clay
Before joining Expedia, she spent a decade at Microsoft in sales, distribution, and marketing roles, and also worked as a consultant at the Boston Consulting Group in San Francisco and Paris. Throughout her 11-year tenure a
Before joining Expedia, she spent a decade at Microsoft in sales, distribution, and marketing roles, and also worked as a consultant at the Boston Consulting Group in San Francisco and Paris. Throughout her 11-year tenure a
Expedia Group
Schulze was Senior Vice President of Strategic Travel Partners, managing all global relationships with travel partners. A long-time Expedia Group veteran, he has held a wide variety of leadership positions for strategy, commercial, operatio
Schulze was Senior Vice President of Strategic Travel Partners, managing all global relationships with travel partners. A long-time Expedia Group veteran, he has held a wide variety of leadership positions for strategy, commercial, operatio
Expedia Group - Wikipedia
In September 2019, the company announced its 300th franchise agreement in North America. Matthew Eichhorst served as president. In 2020, the Expedia CruiseShipCenters rebranded to Expedia Cruises with the tag line Air, Land
In September 2019, the company announced its 300th franchise agreement in North America. Matthew Eichhorst served as president. In 2020, the Expedia CruiseShipCenters rebranded to Expedia Cruises with the tag line Air, Land
Capital Allocation & Strategy
What is Growth Strategy and Future Prospects of Expedia Grou
Streamlined operations following brand integration reduced overlap costs and are driving incremental margin gains in 2025. Higher B2B mix and travel recovery have improved free cash flow stability, enabling sustained capita
Streamlined operations following brand integration reduced overlap costs and are driving incremental margin gains in 2025. Higher B2B mix and travel recovery have improved free cash flow stability, enabling sustained capita
What is Growth Strategy and Future Prospects of Expedia Grou
Expedia Partner Solutions and white‑label deployments powering airline, bank and retailer travel offerings; B2B grew faster than consumer in 2023–2024 and is targeted to increase revenue mix through 2025.
Expedia Partner Solutions and white‑label deployments powering airline, bank and retailer travel offerings; B2B grew faster than consumer in 2023–2024 and is targeted to increase revenue mix through 2025.
Employee Ratings
Overall Rating
4.0/5 ★★★★☆
Culture Signal
Positive
✅ Strengths
- recommend
- supportive
Employee Review Excerpts
Expedia Group "company culture" Reviews | Glassdoor
Sep 11, 2025 · Product manager · Current employee, more than 3 years · London, England · Recommend · CEO approval · Business Outlook · Pros · Pay, equity, real product led culture like any true tech company · Cons · Our leadership is a rota
Sep 11, 2025 · Product manager · Current employee, more than 3 years · London, England · Recommend · CEO approval · Business Outlook · Pros · Pay, equity, real product led culture like any true tech company · Cons · Our leadership is a rota
Expedia Group Reviews (7,725): Pros & Cons of Working At Exp
How satisfied are employees working at Expedia Group?71% of Expedia Group employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Expedia Group 4.0 out of 5 for work life balance, 3.8 for
How satisfied are employees working at Expedia Group?71% of Expedia Group employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Expedia Group 4.0 out of 5 for work life balance, 3.8 for
Expedia Group Reviews in New York NY | Glassdoor
Apr 14, 2025 · Senior software engineer · Current employee · New York, NY · Recommend · CEO approval · Business Outlook · Pros · It's good to work . Cons · software development process is too slow. Show more · Sign in
Apr 14, 2025 · Senior software engineer · Current employee · New York, NY · Recommend · CEO approval · Business Outlook · Pros · It's good to work . Cons · software development process is too slow. Show more · Sign in
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Accumulate — Expedia Group (EXPE)
Current price: $229.98 | Analyst Avg PT: $276.22
$215
🔴 Bear
$299
📊 Base
$424
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$225 | Begin position |
| Tier 2 — Add | ≤$200 | Add on weakness |
| Tier 3 — Full | ≤$185 | Full allocation |
| Sell Alert | ≥$310 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Accumulate. EXPE trades at $230, roughly 30% below our base-case intrinsic value. The post-earnings sell-off (-9% on macro noise) creates an attractive entry point for a company delivering record margins and accelerating B2B growth. P/FCF at 8.7x is the cheapest in years, and the $5B buyback authorization provides a floor. The main risk is macro-driven demand deceleration, but EXPE's operating leverage means even modest revenue growth translates to outsized FCF growth. The bear case still supports $215 — just 7% below current price — suggesting limited downside. Buy on weakness; the market is overdiscounting short-term volatility.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 187 |
| Average Cost Basis | $105.94 |
| Current Market Value | $43,006 |
| Unrealized P&L | $+23,195 (+117.1%) |
| Annual DPS | $1.920/yr |
| Annual Dividend Income | $359/yr |
| Current Yield (at price) | 0.83% |
| Yield on Cost | 1.81% |
| vs Target (~$200K) | $43,006 / $200,000 (22%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Used FY2025 FCF of $3,110M as base (not TTM $4,101M). TTM includes Q1 2026 seasonality and the massive Q3/Q4 seasonal strength. FY2025 FCF margin of 21.1% is more representative of annualized earnings power. Analyst FCF estimates for scenarios reflect margin expansion from 21% → 23-25%. |
| WACC | WACC = 12.0%. CAPM Ke = 11.58% (Rf 4.32% + β=1.32 × ERP 5.5%) understates EXPE's true risk because travel stocks have amplified downside in recessions (dynamic beta exceeds regression beta). Added a 2% travel sector risk premium to get Ke = 13.58%. Kd after-tax = 4.46% (5.5% pre-tax × 81%). We = 85.7%, Wd = 14.3%. WACC = 11.64% + 0.64% ≈ 12.3%, rounded to 12%. This is 2% above pure CAPM, appropriate for a cyclical travel name. |
| Net Debt | Net debt = $233M. Computed as Total Debt $4,706M + Minority Interest $1,260M - Cash $5,733M. Including minority interest is correct because eTravels is a consolidated subsidiary whose 1,260M non-controlling interest represents a claim on equity that reduces value available to EXPE shareholders. Excluding minority interest would overstate equity value by ~$10/share. |
| Sanity Check | Base IV of ~$299 is 8% above analyst consensus PT of $276.22 — within the ±20% threshold. However, base IV is ~30% above the current price of $230, triggering the price divergence check. This override is justified: EXPE trades at 8.7x P/FCF (TTM), well below its 5-year average of ~16x. The market is discounting macro/travel risk aggressively, creating a genuine value opportunity. The 9% post-earnings selloff on macro noise (not fundamental deterioration) reinforces this view. |
| Terminal Growth | gT = 2.5% (Base). EXPE is a mature but still-growing platform. Online travel penetration continues to grow globally. B2B/API distribution is a structural tailwind. Terminal growth of 2.5% is below long-run nominal GDP (2.5-3.0%) to reflect eventual moderation. Bear: 2.0% (recession scenario). Bull: 3.0% (optimistic tech rerating). |
| Buyback Impact | EXPE has reduced diluted shares from 162M (FY2022) to 132M (FY2025), an 18.5% reduction in 3 years. FY2025 buyback yield was 4.4%. The new $5B authorization suggests continued aggressive repurchases. EPS growth of 33.96% in FY2025 included ~10pp from share count reduction. This is a significant and sustainable value driver that the DCF captures through FCF per share. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.