Stock (Symbol) |
Priceline.com (PCLN) |
Stock Price |
$1,273 |
Sector |
| Retail & Travel |
Data is as of |
| December 28, 2015 |
Expected to Report |
| Feb 17 – Feb 22 |
Company Description |
 The Priceline Group Inc. is a provider of online travel and travel related reservation and search services. The Company, through its online travel agent (OTA) services, connects consumers wishing to make travel reservations with providers of travel services across the world. The Company’s brands include Booking.com, KAYAK, agoda.com, rentalcars.com and OpenTable. The Company offers consumers accommodation reservations, including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties, through its Booking.com, priceline.com and agoda.com brands. Its priceline.com brand also offers consumers reservations for rental cars, airline tickets, vacation packages and cruises. The Company offers rental car reservations through its Website rentalcars.com. OpenTable provides its services to consumers and reservation management services to restaurants. Source: Thomson Financial |
Sharek’s Take |
 Priceline (PCLN) is fighting with the strong US dollar. Last qtr, on a constant currency basis, profits increased 29%. But after accounting for the strong dollar profits grew just 14%. The good news in this report is analysts estimate profit growth returning to 20% the first 2 qtrs of 2016, which would be great — but it’s not certain as this qtr’s estimate just got reduced. Among Priceline’s divisions, the International travel site Booking.com had 38% more properties than last year, OpenTable is now starting to roll out internationally, and KAYAK just entered into a partnership with HomeAway to feature more vacation rentals. Management is also buying back $3 billion in stock, around 5% of shares, which helps EPS growth. Profits growth is expected to accelerate from 8% in 2015 to 19% in 2016, and that could give the stock momentum. PCLN sells for 19x 2016 profit estimates, but has had a median P/E of 22 the past 3 years as well as 4 of the last 6. My Fair Value is 22x earnings, giving the stock upside to its fair value of 18% this year and 37% in 2017. |
One Year Chart |
 Last qtr sales rose 9% and profits increased 14%. Notice this is accelerating growth, a positive sign. PCLN is hedging against 4th qtr currency headwinds, but said this qtr’s profits will still be suppressed from 14-21% to 3-10% due to F/X. My guess is profits will rise around 15% this qtr, the company usually underpromises then overdelivers. Estimates show 20% growth returning 2QtrsOut, but who knows. The dollar continues to rise. |
Fair Value |
 Priceline has sold for a median price of 22x earnings for the last three years, and four of the last 6 years. Notice profits have grown every year the last decade, but I remember the 2008-2009 recession when growth slowed (like it did in mid-2015). |
Bottom Line |
Priceline is dealing with a tough dollar right now, but profit growth just re-accelerated from 0% to 14% last qtr and growth could return to the 20% level 2 qtrs from now. I’m optimistic about Priceline, and feel its Booking.com, KAYAK and OpenTable divisions give the company growth opportunity. The stock is reasonably priced at 19x earnings and this is a good time for investors to accumulate shares. PCLN is ranked 11th in both the 28 stock Growth Portfolio and 17 stock Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
11 of 38Aggressive Growth Portfolio 11 of 17Conservative Stock Portfolio N/A |
