Money Matters - Simplified

1-Star Stocks Poised to Plunge: MakeMyTrip?

 

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Indian online travel site MakeMyTrip (Nasdaq:MMYT) has received the dreaded one-star ranking.




 With that in mind, let's take a closer look at MakeMyTrip's business and see what CAPS investors are saying about the stock right now.

MakeMyTrip facts

Headquarters (founded) Gurgaon, India (2000)
Market Cap $932.9 million
Industry Internet retail
Trailing-12-Month Revenue $101.5 million
Management

Founder/CEO Deep Kalra

CFO Rajesh Magow

Trailing-12-Month Net Income Margin (1.1%)
Cash/Debt $65.2 million / $8.5 million
Competitors

Expedia (Nasdaq: EXPE)

Orbitz Worldwide (NYSE: OWW)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 55% of the 78 members who have rated MakeMyTrip believe the stock will underperform the S&P 500 going forward. These bears include cashsage and All-Star TSIF, who is ranked in the top 0.5% of our community.

Earlier this week, cashsage wrote that MakeMyTrip has "a too high valuation compared to its sales potential." Our CAPS member adds: "It is also loss making."

Shares of MakeMyTrip sank more than 25% on Monday after posting disappointing quarterly results, but many in our community think there's still plenty of room to plummet. Even with the recent weakness, MakeMyTrip trades at a massive forward P/E (67.6) premium to U.S.-based counterparts Expedia (13.1), Orbitz (21.0), and priceline.com (23.4), as well as Chinese phenom Ctrip.com (Nasdaq: CTRP) (35.6).

CAPS All-Star TSIF explains why that wide price gap simply isn't justified:

Fresh India Travel Site IPO, with limited financial data. MakeMyTrip might be the next Priceline or Ctrip, but prove it. I think it's over extended until it gets a track history, but I didn't dive too deep into them for this caps play. Simple doubt, my own high risk CAPs model, and what appears to be topping of MakeMyTrip and most companies that have had a hot hand after several others have guided downward and gotten their knees chopped off.

© 2010 UCLICK L.L.C.