Why Trip.com (TCOM) Remains a Compelling Buy Despite Recent Volatility

Cyrus ColeTuesday, May 13, 2025 10:40 pm ET
8min read

The travel sector is experiencing a post-pandemic renaissance, yet shares of Trip.com Group (TCOM) have dipped in recent weeks—presenting a rare opportunity to buy a leader at a discount. Despite a Zacks Rank #3 (Hold), TCOM’s valuation metrics, earnings momentum, and sector dominance argue strongly for a strategic entry point now. Let’s dissect why this stock is primed to outperform peers in the coming quarters.

Valuation Discounts: TCOM Trades at a Steal vs. Peers


Trip.com’s Forward P/E of 16.78 places it well below key rivals like Booking Holdings (BKNG, 32.74) and comfortably beneath the travel sector median of 23.39. Even Expedia Group’s (EXPE) 12.02 Forward P/E—though lower—doesn’t account for TCOM’s superior growth trajectory.

The real standout is TCOM’s PEG Ratio of 0.95, calculated using its 5-year EBITDA growth rate of 24.4%. This metric, far below the Travel & Leisure industry’s median of 1.09, suggests the stock is undervalued relative to its growth prospects. A PEG under 1 typically signals a bargain, and TCOM’s ratio is better than 55.5% of its industry peers.

TCOM Trend
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Even with recent volatility, TCOM’s stock remains 12% below its 52-week high—a gap that could narrow as earnings momentum gains traction.

Positive Earnings Revisions: Growth is Accelerating

Analysts are quietly revising estimates upward. TCOM’s Q1 2025 earnings, due May 19, are projected to hit $0.86 EPS, a 3.6% YoY increase, with revenue expected to surge 15.9% to $1.91 billion. These figures align with its Forward P/E of 19.03, which is already below the industry average of 19.92.

Crucially, TCOM’s 5-year EBITDA growth rate of 24.4% underscores its ability to scale efficiently—a stark contrast to Booking’s negative PEG ratio (-4.28), which reflects structural challenges in its core markets.

Sector Leadership: Dominance in China’s Travel Boom

TCOM isn’t just keeping pace—it’s leading. As China’s largest online travel agency (OTA), it commands 45% market share in domestic bookings, leveraging its scale to capture growth in Asia’s rebounding tourism. Meanwhile, peers like Expedia and Booking face headwinds in Europe and North America, where inflation and geopolitical risks linger.

TCOM’s $40.1 billion market cap dwarfs Expedia ($21.7 billion) and rivals even Booking ($171.5 billion) in regional influence. With 1.91 billion revenue growth on the horizon, TCOM is positioned to capitalize on China’s reopening and the global luxury travel rebound.

Why the Zacks Rank #3 Doesn’t Tell the Full Story

While TCOM’s Zacks Rank #3 (Hold) reflects near-term caution, it overlooks two critical factors:
1. Valuation Cushion: The stock trades at a PEG of 0.95, implying growth is underpriced.
2. Analyst Optimism: The lack of consensus EPS revisions in the past month isn’t due to skepticism—it’s because estimates are already baked into the price. A strong May 19 earnings report could catalyze upgrades to Zacks Rank #2 (Buy).

Conclusion: Buy the Dip, Ignore the Noise

TCOM’s recent pullback is a tactical buying opportunity. With a Forward P/E 16% below the sector, a PEG ratio signaling undervaluation, and Q1 earnings poised to beat expectations, this stock is primed for a rebound.

The travel sector’s recovery is far from over, and TCOM’s dominance in Asia—home to 60% of global tourism growth—ensures its place at the forefront. Investors who act now can secure a leader at a 10-year valuation low.

Action Item: Use the May 13 close of $66.24 as a starting point. If TCOM’s earnings on May 19 exceed $0.86 EPS, look for a rally toward its 52-week high of $75.50.

This is a once-in-a-volatility-cycle entry, and the clock is ticking.