Priceline (NASDAQ: PCLN), owner of popular online travel brands like booking.com, agoda.com, priceline.com, rentalcars.com and kayak.com, has been one of our top stock picks for over two quarters now. The stock has given a great ride to investors with over 30% returns since we first picked it in May 2013. The company, which has outperformed expectations quarter after quarter, is scheduled to announce its Q3 2013 results after market hours today (7th November). We take a look at the past performance, earnings history and our expectations from the forthcoming earnings announcement.
Priceline was once tagged as the ‘ghastly’ reminder of the 1999-00 dotcom bubble. The company has today come a full circle, touching the 1999 stock price peaks in Q2 2013. However this time the climb has been on the back of an efficient business model which has generated phenomenal topline growth and ‘real’ earnings. The Y/Y revenue growth at the company has been above 20% in most of the last 10 quarters, inspite of the fact that the company is the largest online travel company by revenues. Another encouraging fact has been the company’s industry leading margins and earnings growth rate. The average Net Income margin of the company over the last twelve months has been 26.7%, a period which saw the revenues rise by 22.3%. Once you have these numbers, it isn’t a mystery why the stock has been able to give phenomenal returns to the investors. The stock has returned over 70% in the year-to-date up to the closing price on Nov 6th 2013. The company has been growing its earnings far ahead of industry peers, a fact reflected in the price-to-earnings (P/E) multiple of the company. The table below shows Priceline’s key business metrics over the last 6 quarters.
There is little doubt regarding the fundamental strength of the PCLN stock. Let’s now take a look at the company’s earnings history.
Priceline Earnings History
According to streetinsider.com the company has beaten analyst consensus estimates of earnings-per-share (EPS) in each of the last 10 quarters. The company has had an average earnings surprise of 6.5% over the last 10 quarters. On the revenue front the company has beaten analyst estimates in 8 of the last 10 quarters and missing the management’s guidance only once. The overall earnings history of the company has been one which would make any investor happy. The current analyst consensus estimate for Q3 2013 is an EPS of $16.21 on quarterly revenues of $2.21 billion. The consensus EPS estimate represents a Y/Y increase of 30.7% over Q3 2012 while the consensus revenue estimate represents a 30% Y/Y growth over Q2 2012.
The combination of an efficient business model and effective management makes Priceline a valuable pick. We continue to hold our positive outlook on the stock and will not be surprised to see the company beat analyst estimates as well as the management’s guidance for Q3 2013. We shall bring to you an update on the actual numbers tomorrow. Until then CHEERS!!
To see Priceline’s latest stock price movement, click here (NASDAQ: PCLN)