Expedia Group Inc. (EXPE)

Conclusion

Expedia Group operates online travel brands, including Expedia, Hotels.com, Vrbo, Orbitz and trivago, and earns revenue from consumer bookings, business travel services and metasearch referrals. On 9 November 2026 the share price was 259.16 USD, giving a market capitalisation of 29.32 billion USD.

The verdict is undervalued. The price-to-earnings ratio is 13.9 against a ten-year median of 41.4, a premium of -66.4%. EV/EBITDA stands at 7.2 against a median of 11.4 (-37.0%), and price-to-free-cash-flow at 7.8 against 11.5 (-31.7%). The discounted cash flow gives 678.30 USD per share at a discount rate of 11.9%. The fair value band runs from 423.03 to 634.55 USD with a midpoint of 528.79 USD, a margin of safety of 104.0%. The reverse DCF implies revenue growth of -0.2%, while revenue actually grew at a 23.2% compound rate over five years.

What holds the case up is the return on capital: ROIC of 147.6% against a WACC of 10.8%, and free cash flow conversion of 177.8% over the last twelve months. Eight of eight recent earnings were beats. What would break it is the balance sheet: a current ratio of 0.77, an Altman Z-score of 1.72 and debt to equity of 3.44. The price-to-book multiple of 17.7 against a median of 7.9 also leaves little room for error.

Financial health

Financial strength is red, held back by a current ratio of 0.77 and an Altman Z-score of 1.72, while net debt to EBITDA of 0.03 and interest coverage of 8.98 are good. The quick ratio is 0.61 and debt to equity is 3.44. The Altman Z-score sits in the distress zone, although that model was designed for manufacturers rather than an online travel company. Insolvency risk: medium, about 4.9% by the estimate of the Ohlson model over one to two years, based on 2025 annual figures. The low net debt and strong interest coverage suggest that the debt is manageable, but the short-term liquidity position is thin.

Earnings quality

Earnings quality is green. Free cash flow conversion is 177.8% on a trailing basis and 356.1% over five years, and the accrual ratio is -11.0%, which points to cash-backed earnings. Stock-based compensation equals 3.4% of revenue, and free cash flow after it is 3.20 billion USD. The share count fell at a compound rate of 1.4% over five years, which means net buybacks. The Piotroski score is 7 of 9. The Beneish M-score is not available, so no reading on earnings manipulation can be given. Earnings beat expectations in all eight recent quarters, by an average of 12.7%. Analysts revised the current year up by 2.7% over 90 days and the next year up by 4.3%.

Profitability

Profitability is green. The gross margin is 90.5% against a ten-year median of 82.5%, the operating margin 19.4% against 6.9%, and the net margin 13.0% against 3.7%. ROIC is 147.6% against a WACC of 10.8%, and the given ROIC minus WACC value is 136.8%. The five-year median ROIC is 26.8%. Return on equity of 127.5% is inflated by leverage. The DuPont split from 2025 shows a net margin of 8.8%, an asset turnover of 0.60 and an equity multiplier of 19.04, so most of the headline return comes from the high equity multiplier rather than from the margin alone.

Growth

Growth is green. Revenue grew at a compound rate of 8.1% over three years, 23.2% over five years and 8.2% over ten years. Revenue rose in nine of the ten comparable years. EPS compounded at 65.2% over three years and 5.6% over ten years, and free cash flow per share at 11.1% over three years and 18.5% over ten years. Analysts expect next-year EPS to grow by 17.5%. The three-year EPS figure is flattered by a low base, so the ten-year rate is the more reliable guide to long-term growth.

Valuation

Valuation is green. Against ten-year medians, the price-to-earnings ratio is 13.9 against 41.4 (a premium of -66.4%), EV/EBITDA is 7.2 against 11.4 (-37.0%), and price-to-free-cash-flow is 7.8 against 11.5 (-31.7%). Price-to-sales of 1.8 is close to its median of 1.8 (-2.0%), while price-to-book of 17.7 is well above its median of 7.9 (1.2451). The discounted cash flow gives 678.30 USD per share at a discount rate of 11.9%, with the terminal value at 50.0% of the total, so the figure rests heavily on long-term assumptions. The fair value from historical multiples is 379.28 USD. The fair value band runs from 423.03 to 634.55 USD. The fair value is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 0.8%, with a payout of 5.9% of free cash flow.

Risks

The weakest numbers would strain the company if they worsen. A current ratio of 0.77 leaves little liquidity cushion against short-term obligations, and an Altman Z-score of 1.72 signals financial stress under a model that does not fit this business well. Debt to equity of 3.44 amplifies any fall in earnings, and the high return on equity depends on that leverage. A reversal in the strong free cash flow conversion would undermine the earnings case. Not available: the Beneish M-score. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the contribution of each brand cannot be assessed.