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PCLN STOCK WRITE UP


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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