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People Renting Out Vacation Homes is Providing a Boost to Priceline

Stock (Symbol)

Priceline.com (PCLN)

Stock Price

$1,471

Sector
Retail & Travel
Data is as of
October 3, 2016
Expected to Report
Nov 7 – 11
Company Description
priceline_negotiatorPCLN 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
David SharekPriceline (PCLN) is inches away of its all-time high of $1502 on the back of solid International and Hotel sales. Vacation rentals are leading the hotel division growth, as these jumped to 500,000 from 420,000 in May, pushing overall properties to 1 million from 900,000 and helping room nights grow by 24% overall. International revenue grew 19% and now make up 83% of overall sales. Sales increased 15% last qtr, as profits grew just 12%. Still, profits are expected to climb 18% this year and at 21 times earnings this stock is a good buy. Priceline has been fantastic during the last decade: The stock grew 45% on the back of 42% profit growth with record profits each year. Today’s PCLN is only growing in the teens, but is the major player in travel and has multiple divisions with growth opportunity for the future including Booking.com, OpenTable, KAYAK, Ctrip as well as HomeAway and management believes its gaining market share everywhere. My 2017 Fair Value is $1758 and implies 19% upside from current levels.
One Year Chart
pcln_2016_q3Last qtr I said this stock was flatlining and this qtr it’s a totally different story. And really the stock went up as profit growth was the lowest in a year.  Last qtr PCLN delivered profits of $13.93 and beat the street by $1.28. This company usually beats the street, but last qtr profit estimates declined a bit so maybe that spooked investors. This qtr is different as estimates got upped a bit. Profit Estimates for the next 4 qtrs are: 18%, 14%, 17% and 16%. Analysts predict PCLN will grow profits 18% this year and 17% next year.
Fair Value
pcln_2016_q3_epsThe recent rise in the stock has taken away a lot of near-term upside. PCLN’s P/E of 21 is right around where it has been the last 6 years. The stock is close to being fairly valued now and has 19% upside to 2017’s Fair Value of $1758.
Bottom Line
pcln_2016_q3_10yrPriceline continues to deliver growth year-after-year and has become the player in the online travel industry. International growth is strong as usual and the company is now getting a boost from more vacation rentals as people rent out their properties more. Although it has an average safety rating as travel depends on a good economy, I consider this to be one of the best large cap growth stocks to own and trust the company as well as the stock. PCLN ranks 11th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings.
Power Rankings
Growth Stock Portfolio

11 of 37

Aggressive Growth Portfolio

11 of 17

Conservative Stock Portfolio

N/A

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