Trip.com's Share Repurchase Plan and Earnings Momentum: A Strategic Entry Point for Long-Term Investors?

In the ever-evolving travel sector, Trip.com Group Limited (NASDAQ: TCOM) has emerged as a standout performer, blending robust operational momentum with a shareholder-friendly capital structure. As the company navigates a post-pandemic recovery and intensifies its global expansion, its recent financial results and strategic initiatives warrant a closer look for long-term investors.

Operational Momentum: A Foundation for Growth

Trip.com's Q2 2025 results underscore its dominance in the travel tech space. Net revenue surged 16% year-over-year to RMB14.8 billion ($2.1 billion), driven by a 60%+ year-over-year increase in international reservations. Inbound and outbound travel bookings, in particular, outperformed pre-COVID levels by 100% and 120%, respectively. This growth was not confined to a single segment: accommodation revenue rose 21% to $869 million, transportation ticketing grew 11% to $753 million, and corporate travel expanded 9%. Such broad-based strength reflects Trip.com's ability to capitalize on global travel demand while maintaining operational efficiency.

Profitability has also improved, with net income climbing 26% to $681 million and EPS reaching $1.01—surpassing analyst estimates. These figures highlight a company that is not only scaling revenue but also converting that growth into profits, a critical factor for sustainable value creation.

Valuation Metrics: A Tale of Contradictions

Trip.com's valuation story is nuanced. Its trailing P/E ratio of 19.34 and forward P/E of 17.77 sit below the industry average of 25.6x, suggesting a discount to peers. However, the PEG ratio of 2.72—a metric that adjusts for growth expectations—reveals a different narrative. Analysts project only 6.4% annual earnings growth over the next three years, significantly lagging the broader market's 11% forecast. This discrepancy implies that while the stock appears cheap on a P/E basis, its growth premium is not justified by future earnings potential.

The company's price-to-book ratio of 2.12 further complicates the picture. While not excessively high, it indicates a moderate premium over tangible assets. Meanwhile, a DCF model suggests an intrinsic value of $126.73 per share—a 49.8% discount to the current price—highlighting a potential disconnect between fundamentals and market sentiment.

Share Repurchase Program: A Vote of Confidence

Trip.com's $5 billion share repurchase program, announced in July 2025, is a pivotal strategic move. With $13.1 billion in cash and equivalents, the company has ample liquidity to execute buybacks without compromising its expansion plans. This initiative not only reduces the share count but also signals management's conviction in the stock's intrinsic value.

The repurchase of Class B shares from MakeMyTrip, a strategic minority stakeholder, further underscores Trip.com's focus on optimizing capital structure. By aligning with key partners and returning capital to shareholders, the company is reinforcing its long-term value proposition.

Risk and Reward: A Calculated Bet

Despite its strengths, Trip.com faces headwinds. The cost of revenue grew 22% year-over-year, outpacing revenue growth and squeezing margins. Additionally, the Zacks Rank system assigns the stock a “Sell” rating, citing a lack of positive revisions to earnings estimates. These factors suggest that while the company is profitable, its growth trajectory may be uneven.

For long-term investors, however, the risks are tempered by Trip.com's strong balance sheet, disciplined cost management, and strategic repurchase program. The stock's current valuation—discounted by DCF models and undervalued relative to its P/E—presents an opportunity to capitalize on its global expansion and market leadership.

Investment Thesis

Trip.com's combination of earnings momentum, a robust cash position, and aggressive share repurchases creates a compelling case for patient investors. While the PEG ratio and Zacks Rank raise caution, the company's operational execution and capital allocation discipline mitigate these concerns. The key question is whether the market will re-rate the stock as growth expectations stabilize or improve.

For those with a five- to ten-year horizon, Trip.com offers a unique blend of defensive qualities (low debt, high cash reserves) and offensive potential (global travel demand, repurchase-driven value). However, investors should monitor the August 27, 2025, earnings report and any revisions to growth forecasts, as these could signal a shift in valuation dynamics.

In conclusion, Trip.com's share repurchase plan and earnings momentum position it as a strategic entry point for long-term investors willing to navigate near-term volatility. The stock's current valuation, while not without risks, reflects a company poised to capitalize on the next phase of global travel recovery.