Trip.com Group’s strong Q1 earnings: Stock near 2017 high, should you invest?

Trip.com Group Limited (NASDAQ:TCOM) reported impressive financial results for the first quarter of 2024. The company announced a non-GAAP earnings per ADS (EPADS) of $0.83, surpassing analysts’ expectations by $0.26. Despite missing revenue estimates by $20 million, Trip.com achieved a notable 23.1% year-over-year revenue growth, reaching $1.6 billion. Adjusted EBITDA also showed significant improvement, rising to $550 million with a margin of 33%, up from 31% in the same period last year.

The company’s comprehensive service offerings have allowed it to capitalize on the resurgence of travel demand in China. During the first quarter of 2024, domestic hotel and air bookings grew by over 20%, while outbound hotel and air bookings surged by more than 100% year-over-year. This growth is reflective of a broader recovery in the travel sector, driven by relaxed visa requirements and increased consumer confidence.

Fundamentally, Trip.com remains a solid investment with strong financial health. As of March 31, 2024, the company held $11.3 billion in cash and cash equivalents, providing a substantial buffer for future growth and investments. The company’s net income for the quarter was $599 million, a significant increase from the previous year. This robust financial performance, combined with strategic investments in technology and product innovation, positions Trip.com for continued growth.

Valuation-wise, the stock’s recent performance, marked by a substantial year-to-date increase, reflects investor confidence in the company’s growth trajectory. Given the favorable market conditions and Trip.com’s strong fundamentals, the stock appears to be a compelling investment opportunity trading at forward P/E of 21. As travel demand continues to rebound, Trip.com is well-positioned to benefit from this trend, but it’s essential to assess the sustainability of this growth.

Now, let’s see what the charts have to say. Analyzing Trip.com’s stock performance from a technical perspective will provide further insights into whether this bullish sentiment is likely to persist. We’ll examine key technical indicators, trends, and potential support and resistance levels to determine the optimal entry points for investors considering adding Trip.com to their portfolios.

Reversing course: Trip.com’s impressive comeback since March 2022

Trip.com’s stock was in a strong grip of bears for 5 years between mid-2017 and March 2022 during which it crashed from above $60 to under $15. However, the stock has made an impressive recovery over the past two years, especially since the start of this year when it was trading near $34.

TCOM chart by TradingView

At the moment bulls seem to be in complete control of the stock and all long-term momentum indicators are deep in the green. Investors, who want to buy the stock at current levels can do so while keeping a stop loss at $47.2. If the stock manages to cross its all-time high above $60 again, its next stop will be near $72, where one can start booking profits.

Traders who are bearish on the stock must ideally avoid opening a short position here. However, one can go for a low-risk high-reward trade here by shorting the strong around $57.5 and keeping a stop loss a few cents above $61.4. If the stock starts falling, it will find support near $47.5, where they can book profits.

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