Priceline Stock Analysis (NASDAQ:PCLN)

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$1545.01 $5.99 (0.39%) PCLN stock closing price Jan 20, 2017 (Closing)
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Priceline
Updated on : Jan 20, 2017
previous close
PCLN 1545 (0%)
S&P 500 2271.3 (0%)
Closing Price On: Jan 20, 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:
5.4%
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
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
PCLN PS :
7.3
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 sales grew by 18.9% year on year in 2016 Q3.
  • Revenue growth has been tremendous with a compounded annual growth of over the last 5 years.
  • Priceline had a healthy average operating margin of 26.7% over the last 4 quarters.
  • Net margins came in at average 18.9% for Priceline over the last twelve months.
  • The company has an operating cash flow which is 3 times the net income.
  • Priceline's return on invested capital of 17.5% is good.
  • Priceline has a good Return On Equity (ROE) of 21.6%.
  • Priceline has a healthy FCF (Free Cash Flow) margin of 39.4%.

Should you sell PCLN stock?

  • Priceline has a debt/equity ratio of  0.75, which is worse than the average in the Retail-Wholesale sector.
  • The company is trading at a price to sales multiple of 7.3, which is overvalued in comparison to the Internet Commerce industry average multiple of 0.8.

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...
1 • 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.