Priceline Stock Analysis (NASDAQ:PCLN)

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$1631.62 $5.64 (0.34%) PCLN stock closing price Feb 24, 2017 (Closing)
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Priceline
Updated on : Feb 24, 2017
previous close
PCLN 1631.6 (0%)
S&P 500 2367.3 (0%)
Closing Price On: Feb 24, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Commerce
Sector :
Retail-Wholesale
5 Quarter Revenue
Revenue Growth
2016-Q3
$billion
%
YOY GROWTH
Compared to the industry
Long Term Growth
5 Year CAGR:
20.5%
Operating Profit
Operating Margin:
26.7%
Sector Average:
5.5%
5 Quarter Net Profit
Net Margins
2016-Q3
%
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt:
7.34B
Debt/Equity Ratio:
 0.75
Compared to the industry
Cash Flow
Operating cash flow:
$1.51B
Net Income:
$506M
PROS      CONS
Recent Growth
Long Term Growth
Operating Margins
Net Margins
Cash Flow
ROIC
High Debt Burden
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
PCLN PS :
7.8
Industry PS :
0.8
Sector:   Retail-Wholesale.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
17.5%
Return on Equity:
21.6%
Free Cash Flow Margin:
39.4%
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Priceline Analysis Video

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Priceline stock analysis must inevitably take into consideration the macroeconomic headwinds. The company has been severely hit by exchange rate movements and an overall decrease in the customer purchases. Priceline revenue in the third quarter climbed 25% to $2.84 billion, beating the average analysts’ estimate of $2.83 billion. Although the stock has been trading in a range bound fashion in the past few quarters a long term bullish trend might be seen if the company is able to hold to its market share and maintain good margins.

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Priceline Group Inc Stock Rating (3.7/5)

Should you buy PCLN stock?

  • Priceline's revenue growth came in at 18.9% in 2016 Q3.
  • Long term revenue growth has been strong with a 5 year compounded annual growth of 20.5%.
  • Priceline's average operating margin of 26.7% was exceptional.
  • Net margins stood at a healthy 18.9% (average) for Priceline in the Trailing Twelve Months.
  • The operating cash flow looks good at 3 times the net income.
  • Priceline has an attractive ROIC (Return on Invested Capital) of 17.5%
  • The LTM ROE of 21.6% for Priceline is attractive.
  • The company has a healthy free cash flow margin of 39.4%.

Should you sell PCLN stock?

  • Priceline is debt laden and has a high debt/equity ratio of  0.75.
  • Trading at a PE ratio of 25.4, PCLN stock is overvalued in comparison to industry average multiple of 19.7.
  • The company is trading at a price to sales multiple of 7.8, which is higher in comparison to the Internet Commerce industry average of 0.8, making PCLN stock expensive.

Comments on this video and Priceline stock

user profile picture
viren@amigobulls on Priceline stock analysis ($1343.44)
bullish
A rarity among internet companies, Priceline Passes the classic test of DCF valuation. This proves the fundamental strength which supports the PCLN stock. DCF valuation shows intrinsic value at $1680. http://amigobulls.com/articles/priceline...
2 • reply

Priceline valuation has soared to over $60 billion in the recent quarters. This has been on the back of double digit EPS growth for the past six years. Priceline assets topped $10 billion in 2013. The major part of success has been due to its ability to spread across different geographies. Currently over 90% of its revenues are obtained from international operations with Europe making over 60% of its revenues. Its revenues are also more biased towards hotel bookings which account for over 95% of its total revenues. The rest is made from airline reservation, car rental services, cruise reservation and advertising.

Priceline PE ratio chart also shows the effects of these exchange movements and macroeconomic trends. The PE ratio has come down from a high of 35 in early 2014 to 25.64. This decrease has been due to the lower growth estimates given by the company owing to greater competition and tougher economic conditions in Europe which is its major market. It is also expanding in the Asia Pacific region which already has a lot of completion in this niche and has lower rates per booking.