Despegar.com (NYSE: DESP) and Travelport Worldwide (NYSE:TVPT) are both small-cap cyclical consumer goods & services companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

72.6% of Despegar.com shares are held by institutional investors. Comparatively, 92.3% of Travelport Worldwide shares are held by institutional investors. 1.2% of Travelport Worldwide shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Despegar.com and Travelport Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Despegar.com N/A N/A N/A
Travelport Worldwide 3.72% -42.32% 3.96%

Earnings and Valuation

This table compares Despegar.com and Travelport Worldwide’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Despegar.com $411.16 million 4.44 $17.79 million $0.53 51.30
Travelport Worldwide $2.35 billion 0.70 $16.82 million $0.72 18.18

Despegar.com has higher earnings, but lower revenue than Travelport Worldwide. Travelport Worldwide is trading at a lower price-to-earnings ratio than Despegar.com, indicating that it is currently the more affordable of the two stocks.

Dividends

Travelport Worldwide pays an annual dividend of $0.30 per share and has a dividend yield of 2.3%. Despegar.com does not pay a dividend. Travelport Worldwide pays out 41.7% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings and target prices for Despegar.com and Travelport Worldwide, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Despegar.com 0 2 3 0 2.60
Travelport Worldwide 0 2 1 0 2.33

Despegar.com currently has a consensus price target of $35.80, indicating a potential upside of 31.67%. Travelport Worldwide has a consensus price target of $17.25, indicating a potential upside of 31.78%. Given Travelport Worldwide’s higher possible upside, analysts plainly believe Travelport Worldwide is more favorable than Despegar.com.

Summary

Travelport Worldwide beats Despegar.com on 8 of the 14 factors compared between the two stocks.

About Despegar.com

Despegar.com Corp is an Argentina-based travel agency. The Company’s activities are divided into two business segments: Air, as well as Packages, Hotels and Other Travel Products. The Air division focuses on the sale of airline tickets. The Packages, Hotels and Other Travel Products division includes sales of travel packages with or without airline tickets and hotel rooms, as well as stand-alone sales of hotel rooms, including vacation rentals, car rentals, bus tickets, cruise tickets, travel insurance and destination services. Its destinations include Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Spain, the United States, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Dominican Republic, Uruguay and Venezuela. The Company operates through a number of subsidiaries in Latin America and the United States.

About Travelport Worldwide

Travelport Worldwide Limited provides a travel commerce platform, which offers distribution, technology, payment, mobile and other solutions for the travel and tourism industry. The Company connects travel providers, such as airlines and hotel chains with online and offline travel agencies and other travel buyers in its business-to-business (B2B) travel commerce platform (its Travel Commerce Platform). It also provides a range of digital and mobile services that allow airlines, hotels, corporate travel management companies and travel agencies to engage with their customers through mobile services, including applications, corporate booking tools, mobile Web and mobile messaging. Travel Commerce Platform connects travel providers and travel buyers, as well as travel agencies, travel management companies (TMCs) and corporations. As of December 31, 2016, it provided air distribution services to approximately 400 airlines globally, including approximately 125 low cost carriers (LCCs).

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