Shares of Expedia Group (NASDAQ: EXPE) rose today after the company reported better-than-expected second-quarter results and investors overlooked modest third-quarter guidance.

At 1:48 p.m. ET, the stock was up 10.1% following the news.

Expedia benefits from low expectations

Like other online travel agencies including Booking stocks And AirbnbExpedia reported slowing growth as consumer spending on travel declines.

However, after both peer stocks’ results declined, low expectations for Expedia in the third quarter seemed inevitable.

Expedia reported a 10% increase in room nights booked to 98.9 million and gross bookings increased 6% to $28.8 billion. Expedia branded room nights increased 20%, showing the strength of the core brand. This helped drive revenue up 6% to $3.56 billion, beating estimates of $3.53 billion.

This increase translated to solid growth in the bottom line: Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5% to $786 million. On the bottom line, adjusted earnings per share rose 21% to $3.51, comfortably beating estimates of $3.06.

CEO Ariane Gorin said: “Our second quarter results were at the upper end of our expectations,” but acknowledged: “In July, we experienced a more challenging macroeconomic environment and a slowdown in travel demand,” which led to a reduction in the full-year forecast.

Expedia expects weakness

The company expects revenue growth of only three to five percent in the crucial third quarter as customers switch to cheaper hotel rooms.

It also said that full-year gross bookings would be at the lower end of the previous range, but the EBITDA margin would be at 2023 levels.

The price increase seems surprising given the lowered forecasts, but Expedia shares are cheap at a price-to-earnings ratio of just 12, and the company is taking advantage of that discount with share buybacks. This year, the company has bought back $1.2 billion worth of shares. Last year, the company reduced the number of shares outstanding by nearly 10%.

Even if we expect growth to slow in the future, investors seem to believe that this is a promising strategy.

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Jeremy Bowman holds positions in Airbnb. The Motley Fool holds positions in and recommends Airbnb and Booking Holdings. The Motley Fool has a disclosure policy.

Why Expedia Stock Soared Today was originally published by The Motley Fool