Stock (Symbol) |
Priceline.com (PCLN) |
Stock Price |
$1,292 |
Sector |
| Retail & Travel |
Data is as of |
| March 10, 2016 |
Expected to Report |
| May 3 – May 9 |
Company Description |
 PCLN is a provider of online travel and travel related reservation and search services. PCLN, 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. PCLN 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 (rentalcars.com), airline tickets, vacation packages and cruises. PCLN also provides an online price comparison service from various travel Websites through KAYAK. OpenTable provides its services to consumers and reservation management services to restaurants. Source: Thomson Financial |
Sharek’s Take |
 Priceline (PCLN) stock popped after it beat last qtr’s earnings estimates and impressed investors. The online travel company has been at war with a strong US dollar that’s reduced profit growth. After posting flat profit growth 3 qtrs ago, the company has since had 14% and 16% growth the last 2 qtrs. In addition, growth is seen accelerating to 19% and then 20% the next 2qtrs and since PCLN’s beaten analyst estimates the last 4 qtrs, the company could be looking at 20% profit growth ahead. For 2016 management sees 14% to 21% profit growth, and historically has underpromised then overdelivered. The collar continues to crimp results as PCLN predicts 2016 profit growth of 20% to 27% on a constant currency basis, but F/X isn’t as severe as 2015 and currency concerns should be less challenging after Q1. Priceline has many growing divisions, including Booking.com, OpenTable, KAYAK and HomeAway. Management is also buying back $3 billion in stock, which is around 5% of shares. My Fair Value on PCLN is a very reasonable 22x earnings, or $1526 a share, equating to a solid 18% upside potential for 2016. |
One Year Chart |
 Last qtr PCLN had 16% profit growth on a 9% gain in sales. Notice the stock jumped on the news as this pleased investors who were concerned a recession could by lying ahead. 2016 annual estimates increased from $68.54 to $69.38 and that’s a positive sign as the strong dollar caused estimates to decline in 3 of the last 4 qtrs. I love the trend of qtrly estimates. This stock is looking good at 19x earnings. |
Fair Value |
 I feel a P/E of 22 is reasonable for this stock, but I might increase it in the coming qtrs if profit growth continues to climb as anticipated. Still, even at just 22x the upside to my 2016 & 2017 Fair Values is solid. |
Bottom Line |
 Priceline is back to growing qtrly profits in the high-teens and with estimates of 19%, 20%, 18% and 17% the company could be put out +20% growth if it keeps beating as it has. PCLN gets a big boost in my Power Rankings this qtr as I envision good times ahead. The stock is ranked 6th in both the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
6 of 36Aggressive Growth Portfolio 6 of 16Conservative Stock Portfolio N/A |
