Among companies trading on the New York Stock Exchange and the Nasdaq, travel companies have high revenue, gross profit, net income and earnings before interest and taxes (EBIT). The “Hi-Rev Growers” Screener listed several travel companies, including Allegiant Travel Co. (ALGT, Financial), Churchill Downs Inc. (CHDN, Financial), Vail Resorts Inc. (MTN, Financial) and The Priceline Group Inc. (PCLN, Financial). As these companies have solid income statements, the travel industries offer high growth potential to investors.
This article is part 2 in a series of articles discussing how to visualize financial trends with Interactive Charts. In part 1, we introduced the Interactive Chart feature and how it presents historical financial data with comprehensible trend lines. We also explored several basic features, including comparing the Piotroski F-score of Apple Inc. (AAPL, Financial), Alphabet Inc. (GOOG, Financial) (GOOGL, Financial) and Microsoft Corp. (MSFT, Financial).
GuruFocus provides several predefined interactive charts, including the Peter Lynch Chart and the P/S valuation bands. We mentioned the former in the previous article and will discuss the latter in a subsequent article. This article will focus on the income statement chart and the balance sheet chart.
Income Statement chart graphs historical growth trends
The Income Statement predefined chart graphs the company’s revenue, gross profit, net income and EBIT on the same graph. Figure 1 shows the income statement chart for Expedia Inc. (EXPE), one of the most popular online travel websites.
Figure 1
Based on Figure 1, we can observe that Expedia’s revenue and gross profit generally increased during the past 15 years, suggesting that the online travel company has high profitability. Expedia has a profitability rank of 8, likely due to high three-year revenue growth and three-year EBITDA growth. Both of the above financial metrics currently outperform over 87% of competitors.
As the data includes several outliers, we have appropriately consolidated the distribution of average income statement financial metrics to focus on the relevant data only. Among industries with an average trailing 12-month revenue between $0 billion and $15 billion, the distribution is right-skewed with a median revenue near $2.5 billion and a median gross profit near $1 billion. The median net income among industries with average net income between -$11 million and $11 million is about $1 million.
As shown in Figures 2.1 to 2.4 below, all four travel companies generally had expanding revenues and gross profits during the past 10-15 years. Among the companies, Priceline had the largest revenue increase: during its history, Priceline’s revenue increased from nearly $500 million to over $9.2 billion, as observed in Figure 2.4.
Figure 2.1
Figure 2.2
Figure 2.3
Figure 2.4
Balance Sheet chart graphs key financial strength trends
To determine which of the four travel companies offers the strongest growth and value potential, we can graph the companies’ Balance Sheet predefined chart. This chart graphs the company’s current assets, long-term assets, total assets, long-term debt and total equity. Figures 3.1 to 3.4 display the four travel company’s balance sheet chart.
Figure 3.1
Figure 3.2
Figure 3.3
Figure 3.4
At first glance, Priceline likely offers the safest investment since it has the largest total assets. We can verify this with the historical trend of the debt to assets ratio of the four companies. Figure 4 summarizes the debt to assets ratio trends for the four travel companies.
Figure 4
Although Priceline had the highest increase in total assets, the company had volatile debt to assets ratios, suggesting that the company relied on debt spontaneously throughout its history. On the other hand, Vail Resorts had the least volatile debt to assets ratios. Additionally, the mountain resort operating company’s debt to assets ratios generally declined during the past 20 years.
Up next
So far, we have discussed the basic features of Interactive Charts and two of the predefined charts. We still have to explore one of the most useful predefined charts, the price-to-sales valuation chart. This chart can identify good times to invest in the stock and / or close a position in the stock. Additionally, the Interactive Charts feature also allows Premium users to generate customized series and user-defined charts, as well as exporting the charts to Excel. We can also discuss the incorporation of technical indicators to the charts.
You can view the user manual on interactive charts by clicking the “PDF Tutorial” button in the upper-right corner, between the “Reset All” and “Video” buttons. Although free members have limited access to Interactive Charts, most of the features require premium membership. If you are not a premium member, we invite you to a free seven-day trial.
Disclosure: The author has no position in the stocks mentioned in the article.
