Priceline Stock Analysis (NASDAQ:PCLN)

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$1752.01 $8.79 (0.5%) PCLN stock closing price Apr 21, 2017 (Closing)
Watch Robo Advisor Video of PCLN Stock Analysis
Updated on : Apr 21, 2017
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PCLN 1752 (0%)
S&P 500 2348.7 (0%)
Closing Price On: Apr 21, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Commerce
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PS Valuation
Rating: ★★★★★★★★★★ (0/5)
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Industry PS :
Sector:   Retail-Wholesale.   *PE adjusted for one time items.
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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?

  • The Year Over Year (YoY) revenue growth for Priceline was 17.4% in 2016 Q4.
  • Revenue growth has been tremendous with a compounded annual growth of 19.8% over the last 5 years.
  • The TTM operating margin was good at 27.1% for Priceline.
  • Net margins came in at average 19.9% for Priceline over the last twelve months.
  • The company has an operating cash flow which is 1.6 times the net income.
  • Priceline's return on invested capital of 18.3% is good.
  • Return On Equity (ROE) which is a measure of the company's profitability, looks great for Priceline at 22.8%.
  • Priceline has a healthy FCF (Free Cash Flow) margin of 44.9%.

Should you sell PCLN stock?

  • Priceline is debt laden and has a high debt/equity ratio of  0.73.
  • PCLN stock is trading at a PE ratio of 26, which is worse than the industry average multiple of 19.6.
  • The company is trading at a price to sales multiple of 8, which is higher in comparison to the Internet Commerce industry average of 0.7, making PCLN stock expensive.

Comments on this video and Priceline stock

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viren@amigobulls on Priceline stock analysis ($1343.44)
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.
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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.