Priceline Earnings Q3 2015: Guidance Overshadows A Strong Beat

  • Priceline earnings Q3 2015, announced on Monday, easily beat analyst estimates.
  • The company grew its revenue 9%, earnings by 14%, but was hammered anyway on account of weak guidance.
  • Priceline has done this before. Now is the time to buy.

Priceline (NASDAQ:PCLN) beat analyst estimates on earnings, but the stock was hammered anyway.

Priceline earnings Q3 2015, announced before trading opened on Monday, looked really awesome at first glance.

Net income came in at $1.196 billion, $23.67 per share, on revenue of $3.102 billion. This compared with income of $1.062 billion, $20.27 per share, and revenue of $2.836 billion a year earlier. Adjusted earnings came in at $25.35 per share.

That means that while revenues were rose just 9% Y/Y, net income was up 17%. Margins are enormous, at more than one-third of revenues, and operating earnings are even bigger, one half of revenues.

Both the top line and bottom line beat estimates. Analysts had been anticipating revenue of just $3.05 billion, and adjusted earnings of $24.23 per share.

So what could be wrong?

It was the company’s advice about the future, which sounded downright pessimistic, with a revenue growth it estimated at just 1% to 9%, and earnings of $11.10-11.90. Analysts had been modeling earnings of $12.42 for the quarter.  As a result, Priceline stock price fell by 8% or $118 per share in regular trade on Monday.

PCLN stock chart

Source: Priceline stock price data by

This should be a buying opportunity. The same sort of action happened after Priceline last reported earnings, in August. Shares fell over $100/share. But they recovered. They’re up over 15% since then. While Priceline shares have not been advancing in the last few years as they did earlier in the decade, they are still up 14% since the start of 2014. Few years will ever beat the 2013 gain of 77% in the shares, but those results were no fluke. This is a well-run, and conservatively managed, company.

Priceline and Expedia (NASDAQ:EXPE) have created a grand duopoly in the travel market, akin to what Coca Cola (NYSE:KO) and Pepsico (NYSE:PEP) have in soft drinks. Yes, there are other soft drink companies, but Coke and Pepsi are completely dominant, their rivalry never really cutting into the other side’s profit margins. The same is true for Priceline and Expedia, whose 2015 is looking a bit like Priceline’s 2013, with shares at that company up nearly 50% so far.

EXPE stock chart

Source: Expedia stock price chart by

Since the moment Priceline earnings were announced, meanwhile, the slow grind upward in the stock has begun again. In two days, they have advanced 1.4%. What that should tell you is that this is a great stock to invest in, if not to trade in. Priceline has more than a single niche – with its wide range of sites like OpenTable, and KAYAK, it has achieved something approaching dominance, dominance which the rivalry with Expedia is also hiding from anti-trust authorities.

Priceline remains a strong buy.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :
Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
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