Priceline Q3 2013 Earnings: Future Guidance Eclipses Past Performance

PCLN Q3 2013 earnings report

Priceline (NASDAQ: PCLN), one of our top stock picks came out with their Q3 2013 results after market close on November 7th. Our newsletter yesterday had covered the earnings preview and we will today follow that up with our take on the Q3 numbers and our opinion on the stock post-Q3 2013. The strong performance failed to pep up the stock price as the stock dipped 3.3% in regular trading session on November 7th.

Priceline Q3 2013 Performance

In our earnings preview yesterday (November 7th) we had mentioned that Priceline had a very efficient business model. The Q3 2013 performance of the company is a proof of the efficiency of its business model. Priceline’s strategy of global expansion is paying off with the company seeing its international operations contributing close to 90% of its gross profits. The quarter saw a whopping 33% Y/Y jump in overall revenues compared to the 17% in Q3 2012. The Topline growth was accompanied by margin expansion (both operating margins and net income margins increased by over 1.5%) leading to GAAP earnings per share (EPS) growth of 34.8%. The table below sums up Priceline’s operating numbers for the quarter.

PCLN Q3 2013 performance

Actual v/s Estimates v/s Guidance

Priceline Q3 2013 Actuals vs estimates vs guidance

The company comprehensively beat analyst consensus estimates as well as management’s guidance. Q3 2013 saw an earnings surprise of 6.7% over analyst estimates and a 9.5% beat on the management’s guidance.

Conclusion

Inspite of the strong quarterly performance, the stock saw a 3.3% dip in regular trading yesterday. We feel the market has overreacted to the Q4 2013 guidance miss. The company has guided Q4 2013 Non-GAAP EPS to be in the range of $7.8 to $8.3 against the consensus estimates of $8.34. The market may be overreacting to the 35% sequential dip in revenues forecasted for Q4. While the stock price may fall further due to the guidance miss, we continue to hold a positive long term view on the company’s future performance. The latest fall in the stock price could be an opportunity for investors to buy into the stock to benefit from the future potential of the stock.

To see Priceline’s latest stock price movement, click here (NASDAQ: PCLN)

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Comments on this article and PCLN stock

Banger
Priceline CEO is out. There might be some trouble brewing..
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