Is TripAdvisor a Bargain Here?

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With shares of TripAdvisor Inc. (NASDAQ:TRIP) trading at around $43.55, is TRIP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The bad news is that marketing costs will rise quicker than revenue in 2013. While this may pressure sales in the first half of 2013, the good news is that it’s not expected to have a long-term impact. TripAdivisor is choosing to add costs, which include a makeover of its display and investments in social media.

Q4 EPS came in at $0.23. The average expectation was $0.21. Q4 revenue increased 23 percent to $169.4 million. The average expectation was $167.1 million. However, there was no formal guidance, and the announcement that marketing costs would rise quicker than revenue severely impacted the stock price.

TripAdvisor now averages 60 million unique visitors per month. In Q4, unique visitors increased by approximately 45 percent. TripAdvisor is also now used in 30 countries. Another positive is that the company announced a $250 million stock buyback plan. Furthermore, according to Glassdoor.com, 83 percent of employees approve of CEO Stephen Kaufer.

Now let’s take a look at some important numbers prior to forming an opinion on the stock…

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