Priceline Earnings Q3 2015: Is Priceline The Fifth FANG Stock

  • Priceline earnings Q3 2015 will be announced on November 9, before market open.
  • As powerful as Facebook, Amazon.Com, Netflix and Google (now Alphabet) have been, Priceline has been just as powerful in online travel.
  • Priceline beats earnings estimates two-thirds of the time, and should easily top $24.21/share in earnings.
  • A new alliance with Trip Advisor provides a future growth catalyst.

Investors this decade talk about the FANG stocks -- Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet Inc-A (NASDAQ:GOOGL) -- the way their parents used to talk about the Beatles back in the 1960s, in tones of reverent awe.

But “back in the day” there was always talk of the “Fifth Beatle,” someone else who performed with them a lot, like Billy Preston, or whose sound and success was reminiscent, like Elton John. For many the fifth Beatle in FANG is Priceline (NASDAQ:PCLN).

Each of the other FANG stocks has disrupted a major industry in order to build a base for its technology. For Facebook, social networking. For Amazon, retailing. For Netflix, entertainment. For Google, online search.

For Priceline, that something is travel. While its success was built on the eponymous “name your price tool” advertised for years by actor William Shatner (and now by “Big Bang Theory” star Kaley Cuoco, playing his character’s daughter) the company is much, much more. It’s, it’s, it’s and OpenTable. It’s even hotel marketing platform Buteeq, bought last year. You may think you don’t do business with Priceline, because you’ve never gone to, but chances are you have, and that Priceline knows all about your travel preferences as a result.

Priceline has created a duopoly in the travel business (along with Expedia (NASDAQ:EXPE)) that rivals that of Coca Cola (NYSE:KO)- Pepsico (NYSE:PEP) in its market power. Over the last five years Priceline shares have nearly tripled in value and even if you bought at the absolute peak of the dot-com bubble, in September 1999, you’re up 50%.

Priceline earnings Q3 2015 are scheduled to be reported on November 9, before market open. For its June quarter, Priceline had $2.28 billion in revenue and drove over 25%, $678 million, to its net income line. The “whisper number” for the fourth quarter is earnings of $24.62/share, the analyst consensus is $24.21 and the company beats estimates 65% of the time. The numbers, along with the stock price of $1,462, are kept high because the float is so low, with fewer than 52 million shares outstanding.

While the other FANG stocks are based on technology, Priceline is based on markets. No matter how you choose to book a trip, Priceline wants one of its sites to be a default choice. This makes its recent deal with TripAdvisor (NASDAQ:TRIP), announced at the end of the quarter, so exciting. Priceline sites will become integral to Trip Advisor’s “book now” feature, and TRIP stock rose 25% on the news.

With two-to-one odds of beating the number, and with a new growth catalyst in hand that could lead to another acquisition down the road, Priceline is extraordinarily well-positioned. The Price/Earnings multiple is a Google-like (excuse me, Alphabet-like 32.66) but there are few non-FANG stocks that deserve it.  

Fifth Beatle, indeed.

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Comments on this article and PCLN stock

@Dana 85% of revs come from overseas ops. Forex headwinds of over 12% YoY, as US Dollar index has moved from 85.91 to 96.23 (Sep 2014 end to Sep 2015 end-Source: EPS of $24.21 would imply a 9% YoY growth over $22.16 in Q3 2014. Would be a significantly strong performance in face of 12% to 13% forex headwinds.

Do you think a beat still looks likely?

Any thoughts on that?
1 reply
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It is possible, but less likely. But PCLN will be getting tailwinds when currencies adjust the other way. It's like having future potential energy behind you.
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