PCLN (THE PRICELINE GROUP)
- P/E: 40.6
- GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $1.64
- SECTOR: CONSUMER SERVICES
- ASSETS-LIABILITIES: 2
- DIVIDEND: none
Priceline is a
vacation-booking company, offering services for flight reservation,
hotel reservation, and car rental in one convenient place. In recent
years, Priceline's revenues have grown above Expedia's, another major
competitor in the field. They recently reported earnings on 5/9/17,
and the recent market dip has provided an opportunity to buy shares
at a discounted price.
Compared to the comparable
2016 quarter, Priceline increased revenue by 13%. GAAP net income
also increased by a substantial amount. The company also increased
spending across the board, from advertising to “general and
administrative.” Part of the growth in income is a substantial
decrease in what the company reports as “cost of revenues.”
Glenn Fogel, former
investment banker and Harvard Graduate, is the group's CEO as of
December 2016. Subsequent to his appointment to the office,
Priceline acquired the Momondo group in 2017, which is a UK website
for travel metasearch. Previously, the company acquired Kayak,
another metasearch company, and opentable, a restaurant booking app.
After the most recent
quarter, the company set its profit guidance below wall street
expectations, according to seekingalpha. Between 2008 and 2016, the
number of travelers who booked trips online rose approximately 50% to
64 million, so wall street expectations have risen for travel stocks,
consequently driving up share prices. Priceline has been able to
increase their revenue without cutting jobs or marketing budget. If
Priceline can keep up with these elevated Wall street expectations,
shares will continue to rise. Priceline's price-to-earnings multiple
is below two of its closest competitors, TRIP, and EXPE.
Priceline has a clean
balance sheet, an efficient business model producing income from
revenue without sacrificing spending that is essential to the
business, and a new CEO who has already made a large acquisition to
expand company exposure overseas. This stock's success is reliant on
the perceived wealth of consumers, as people who do not feel they
have money will not travel. Priceline has been able to produce
earnings consistent with expectations to keep its price-to-earnings
multiple below competitors.
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