SA News • Wed, Dec. 17
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Priceline Has Lots Of Competition But Is Best Of Breed
- The company is transitioning from a growth phase valuation to a value phase valuation at this point in time.
- Management has an excellent record of increasing the stock price and I don't doubt that they will continue to do so, even if it involves a strategic acquisitions.
- FBR recently downgraded the stock to "market perform".
- PCLN's large multi-year stock gains would lead many to believe it's overpriced.
- While PCLN's stock hasn't fallen significantly in 2014, its valuation multiples have declined rapidly thanks to improved earnings and margin.
- PCLN is attractively valued for 11% to 18% top-line growth, but could very well return to 20% plus growth with a weaker dollar.
Priceline In An Acquisitive Mood: What Company Is Next After OpenTable?
- Priceline has announced that it is now open to acquisitions.
- Yelp and HomeAway are two of the companies that had been earlier mentioned as possible takeover candidates by Priceline.
- HomeAway's business appears to be a better fit for Priceline's business, making it a better target.
Priceline Fears Slowdown Due To Challenging Economic Conditions In Its European Market
- Priceline reported revenues of $2.84 billion, up almost 25% from $2.27 billion in the 3rd quarter of the previous year.
- Adjusted earnings per share for the online travel company amounted to $22.16, up 28% from $17.3 per share in the year ago quarter.
- For the 4th quarter of the fiscal year 2014, Priceline is expecting year-on-year revenue growth to range between 11% and 18%.
- The company’s weak guidance for the last quarter of the current fiscal year can be attributed to the strength of the dollar against the euro.
- Investors should hold off investment for now and wait for the company’s Q4 earnings report to make any definitive investment decision.
Buying More Growth In My Portfolio Through Priceline
- The company has increased its return on assets and equity in the past five months.
- Though 2015 earnings estimates have been slashed I believe they are a bit more realistic.
- The technicals are exhibiting a bit of upside at this price.
Comparing Priceline To Expedia - Why Priceline Comes Out On Top
- Priceline and Expedia trade at similar forward multiples, despite analyst projections of faster future earnings growth at Priceline.
- Priceline possesses a more conservative balance sheet than Expedia and exhibits a stronger competitive position through impressive efficiency ratios.
- While Expedia shares appear to be slightly overvalued, Priceline shares could rise by at least 60% given the company's earnings growth potential.
Priceline: Fighting Against Adverse Currency Movements
- Gross bookings shot up by 28.4% in the third quarter of fiscal year 2014 which culminated into a staggering top line gain of nearly 25%.
- Top line growth trickled down to the bottom line and the company’s net profit margin witnessed an improvement of 75 basis points to reach 37.45%.
- On a per share basis, EPS for the fourth quarter is anticipated to be reported in the range of $22.48 to $23.89.
- Priceline is trying on its part to make things favorable by taking a number of active steps to achieve future growth.
- The stock represents an upside potential of approximately 50%. On the flip side, it is not a regular income providing stock.
- I view the recent negative price action on Priceline shares (which was based on relatively soft guidance for Q4, driven by external macroeconomic concerns) as an overreaction.
- The company's operating results suggest robust fundamentals, and I view the company's economic moat as intact. The company's international growth, agency revenues, and network effect will benefit it in time.
- Despite lowering my fair value estimate slightly, I view shares as materially undervalued, and am strongly considering purchasing more shares at current levels.
Priceline's Q3 Earnings Report Has Sent Shares Falling More Than 5%, Should You Consider The Stock Now?
- Q3 earnings were announced before the market opened on November 4.
- Earnings per share and revenue came in above expectations.
- The company's stock has reacted by making a sharp move to the downside.
- PCLN is suitable for Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is fairly valued at the present time.
- The market is implying an 11.98% earnings growth over the next 7-10 years, within a margin of safety relative to the rate the company has seen in recent years.
Does The Priceline Whisper Number Indicate Investor Confidence?
- The whisper number is $21.63, fifty-two cents ahead of the analysts' estimate.
- Priceline has a 68% positive surprise history (having topped the whisper in 25 of the 38 earnings reports for which we have data).
- The overall average post earnings price move is 'negative' (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
- Priceline Group is slated to report 3Q 2014 earnings before the bell on Tuesday, November 4th.
- Adjusted Earnings Per Share: Company guidance is in a range of $19.60 to $21.10. The current Street estimate is $21.14 (range $20.07 to $22.18).
- Revenues: Analysts expect an increase of 24.8% y/y to $2.83 bln (range $2.73 bln to $2.96 bln).
- I looked through every company in the S&P 500 to see if there were any companies that have had increasing free cash flow every year.
- I found that only 3 companies out of the whole S&P 500 have increased free cash flow each of the last 10 years.
- In part 1 of my series I focused on Oracle which was the only dividend payer, and in this article I will be focusing on Priceline & F5 Networks.
- Priceline's shares have started to trend negative on little news-- is this an opportunity or a sign of something more ominous?
- The company's competitive position, particularly against Expedia and Orbitz, is compelling, and getting stronger with time.
- The negative price action looks to be an opportunity to get a strong growth story at an excellent value.
SaaS M&A: How To Predict Stock Direction AFTER An Announcement
- Average acquisition premium to undisturbed share price is 53.8%.
- Three findings may help you predict stock direction of the acquirer over time.
- The average EV/Revenue multiple for: (i) public targets is 8.0x, (ii) private targets is 5.2x and (iii) sub- $25 million revenue targets is 4.8x.
- Public acquirers may have an opportunity to 'Print money' if they can buy a private at 5.2x and continue to trade at 8.0x.
- Priceline reported strong revenue and earnings growth for the second quarter of 2014.
- China’s online travel market is very important for Priceline’s future growth.
- Priceline recently acquired Open Table, an online restaurant reservation company.
- Priceline beat the analyst earning consensus but fell short on its top line. Priceline’s guidance for the next quarter falls short of the analyst consensus due to overseas investments.
- Priceline gains on all key stats including gross bookings. The healthy double digit growth and its investment in the emerging market are likely to continue.
- The consensus target price shows that the company is undervalued at its current price with healthy return and the relative valuation confirms this undervaluation.
Priceline: Earnings Upside Still Obvious, Valuation Still Compelling
- Easy comps in Q3 and Q4 suggest that bookings and gross profit growth is unlikely to slow down and that Priceline’s Q3 guidance is overly conservative.
- Current margin resilience gives confidence in Priceline’s ability to preserve its margins going forward while investing in new segments and growing revenues at a fast pace.
- Valuation (20.5x 2015 EPS) remains undemanding in view of a 20% earnings CAGR.
- PCLN's 2Q14 continue to show solid execution amid a tough competitive environment.
- Overall revenue growth was solid in all business and geographical segments.
- Integration on track with mobile payment rolling out. Expect to see more M&A and strategic investments to maintain the growth profile.
Wed, Dec. 17, 4:00 PM
- Gillian Tans, the COO of Priceline's (PCLN +2.8%) giant Booking.com unit (based out of Amsterdam), has been promoted to president and "will assume responsibility for the day-to-day operations." In addition, David Vismans, who has been serving as Booking.com's front-end product director, is now the travel site's chief product officer.
- Darren Huston remains Booking.com's CEO, but he'll now have an "increased focus on talent development and driving long-term growth across Booking.com and The Group."
- Meanwhile, Priceline has named Ian Brown, until now the COO of U.K.-based Rentalcars.com, the unit's CEO. He replaces Rentalcars.com co-founder Greg Willis, who will now act as executive chairman.
- The shakeup comes six weeks after Priceline offered soft Q4 guidance that had much to do with slowing European bookings growth (caused in part by a weak euro).
- Priceline followed equity markets higher today. Shares sold off yesterday thanks to a Goldman downgrade and broader Internet stock selloff.
Tue, Dec. 16, 9:50 AM
- Believing forex headwinds (especially a weak euro) will offset share gains, Goldman's Heath Terry has pulled Priceline (PCLN -1.7%) from its Conviction Buy list, and slightly cut his 2014-2016 EPS estimates.
- However, Terry maintains a Buy rating, arguing Priceline will continue outgrowing the broader online travel market as mobile usage and the adoption of metasearch platforms (e.g. TripAdvisor, Kayak, Trivago) drives share consolidation and yields margin growth.
- FBR downgraded Priceline two weeks ago. Following a 9% YTD drop, shares go for 17x 2015E EPS.
- Yesterday: Priceline makes offer to end European probes
Mon, Dec. 15, 6:13 PM
- Priceline's (NASDAQ:PCLN) huge Booking.com unit has proposed giving hotel partners more leeway to offer cheaper prices on rival sites (something often prohibited by its current deals), in order to end probes from French, Italian, and Swedish antitrust regulators who have been working with the EC.
- The proposal would still require hotel owners signing price parity agreements not to undercut Booking.com on their own sites, but would allow them to do so on rival sites such as Expedia's (NASDAQ:EXPE) Hotels.com.
- International bookings accounted for 88% of Priceline's Q3 bookings; European purchases made via Booking.com undoubtedly accounted for a big chunk of the total.
- Priceline fell 2.3% in regular trading, and Expedia fell 0.2%. The Nasdaq was down 1%.
Fri, Dec. 5, 7:06 PM
- Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE) have made their hotel inventory available for in-app bookings through Priceline-owned Kayak and travel startup Top10's app. However, they refuse to do the same for the Instant Bookings feature within TripAdvisor's (NASDAQ:TRIP) mobile apps.
- Priceline and Expedia's stance highlights the tension between the companies and TripAdvisor. While TripAdvisor drives plenty of traffic to both companies' sites (in exchange for referral fees) through its metasearch platform, it also does so for many rival sites, and (like Google) acts as an alternative to directly using Priceline and Expeida's platforms.
- TripAdvisor's click-based ad revenue (metasearch-driven) rose 31% Y/Y in Q3 to $247M. It's expected to grow at a mid-20s to high-20s clip for the whole of 2014.
Tue, Dec. 2, 10:06 AM
- Though Priceline (PCLN -0.9%) remains well-positioned competitively, it "appears to be entering the latter stages of its growth cycle, and that can be a tough transition for investors to work with," writes FBR's Jake Fuller, downgrading to Market Perform.
- Priceline is a month removed from selling off due to the light Q4 guidance provided with its Q3 EPS beat. The online travel giant, known for guiding conservatively, has forecast bookings growth will slow to 8%-15% in Q4 from 28% in Q3.
Tue, Dec. 2, 2:19 AM
- After making the company’s biggest deal ever in the summer, Priceline (NASDAQ:PCLN) Chief Executive Darren Huston says he is still willing to consider additional takeovers.
- Apart from the $2.6B OpenTable acquisition, the company has been mostly expanding through travel websites, like booking.com and Kayak.com.
- "We’re not a serial acquirer," cautioned Huston saying Priceline will be selective in any deals it pursues. "We have six brands at the table. We can’t have 15 brands."
- PCLN -0.1% AH
Thu, Nov. 20, 7:39 PM
- Skift reports Amazon (NASDAQ:AMZN) is "poised to launch its own travel service, featuring booking at independent hotels and resorts near major cities." The service, known as Amazon Travel, will likely go live around New Year's, and initially "feature a curated selection of hotels" near NYC, L.A., and Seattle.
- Amazon would collect a standard 15% commission from hoteliers who would upload inventory and set prices. A source says hoteliers would normally list properties at rack rates, but would also be free to discount.
- Though limited in scope, Amazon's service would put the company into competition with online travel agencies (OTAs) such as Priceline (NASDAQ:PCLN), Expedia (NASDAQ:EXPE), and Orbitz (NYSE:OWW). OTAs have already seen Google, the recipient of much of their ad spend, encroach on their turf a bit with new services.
- As Skift notes, Amazon could appeal to independent/boutique hotels with less marketing reach than major chains. Amazon, meanwhile, could leverage its user data to cross-sell or bundle various goods.
- Separately, Amazon has inked a 17-year lease to rent 470K sq. feet of office space (effectively an entire 12-story building) across from the Empire State Building. The WSJ previously reported Amazon wants the building to be the location of its first brick-and-mortar store, and also serve as a warehouse and order pickup/return hub.
Tue, Nov. 4, 9:15 AM
Tue, Nov. 4, 8:51 AM
- Priceline (NASDAQ:PCLN) beat Q3 EPS estimates and posted in-line revenue, but offered EPS guidance that was well below consensus and noted macro conditions are mixed, especially in Europe. Revenue guidance (11%-18% Y/Y growth vs. a 23.8% consensus) is also light.
- The online travel giant also reported bookings growth slowed to 28% in Q3 from 34% in Q2 - U.S. bookings growth fell to 9.9% from 20.6%, and international growth to 31.6% from 36.2% - and guided for just 8%-15% Q4 bookings growth. Forex (driven by a weak euro) is expected to have a 500 bps impact on Q4 growth.
- While Priceline has a history of guiding conservatively, the size of the guidance shortfalls is raising eyebrows. Expedia (NASDAQ:EXPE) -1.2% premarket, TripAdvisor (NASDAQ:TRIP) -0.8%. TripAdvisor reports after the bell.
Tue, Nov. 4, 7:59 AM
- Q3 non-GAAP net income of $1.2B up 29% Y/Y. Non-GAAP EPS of $22.16 vs. $17.30 a year ago.
- Gross travel bookings of $13.8B up 28% Y/Y.
- CEO Darren Huston notes a "mixed macro-economic backdrop, particularly in Europe."
- Q4 guidance: Gross travel bookings up 8-15%. Non-GAAP EPS of $9.40-$10.10 vs. the Street at $10.91.
- Previously: Priceline.com beats by $1.05, revenue in-line
- Conference call is underway
- PCLN -6.8% premarket
Tue, Nov. 4, 7:32 AM
Fri, Oct. 31, 1:42 PM
- Expedia (EXPE +5%) is rallying after beating Q3 estimates on the back of a 29% Y/Y increase in gross bookings (even with Q2's clip) to $13.5B. U.S. bookings rose 35% to $7.9B, and international bookings 22% to $5.6B.
- Hotel room nights rose 24% Y/Y (down from Q2's 28%), and air tickets 30% (up from Q2's 28%). Revenue per room night fell 2%; revenue per ticket fell 7%.
- Sales/marketing spend (much of it on Google) rose 30% to $815.8M, and tech/content spend 20% to $172.8M. $130M was spent on buybacks.
- On the CC (transcript), the company reiterated guidance for 16%-19% full-year adjusted EBITDA growth. CEO Dara Khosrowshahi noted the Travelocity deal is boosting top-line performance, and said the company plans to increase investments in its Chinese eLong (LONG -0.5%) unit, which is facing "challenges and competitive headwinds."
- With marketing spend remaining high and investments in eLong and Trivago ramping, Benchmark expects "minimal EBITDA margin expansion" in 2015. But it also expects 13% sales growth after the Travelocity deal reaches its 1-year anniversary.
- Priceline (PCLN +4.6%) and TripAdvisor (TRIP +2.8%) are getting a lift from Expedia. The Nasdaq is up 1.3%.
Tue, Oct. 14, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Tue, Sep. 16, 6:59 AM
Fri, Sep. 5, 7:31 AM
- Citing competitive concerns thanks to Google, Evercore pulls its Overweight rating on Priceline (NASDAQ:PCLN), and lowers the price target to $1,350 from $1,450.
- The team pulls its Underweight rating on Tripadvisor (NASDAQ:TRIP), upgrading to Equal-weight and lifting the price target to $110 from $85.
- PCLN -0.9% premarket
Thu, Aug. 21, 11:43 AM
- Hedge funds are having a difficult time of it again this year, up 1% vs. a 7.5% gain for the S&P 500, according to Goldman Sachs, which crunched the numbers on 775 funds with $1.9T in AUM.
- Nevertheless, Goldman's list of 50 stocks which "matter most" to hedge funds has outperformed the S&P 500 on a quarterly basis 66% of the time since 2001. The stocks this quarter (posted in order of the number of funds in which a name is a top-10 holding):
- ACT, AAPL, FB, AGN, AAL, GM, TWC, AIG, MSFT, HTZ, CHTR, MU, WMB, LNG, C, DAL, HCA, APC, CBS, ALLY, GOOGL, APD, NRF, BAC, EBAY, LBTYK, PCLN, VRX, BIDU, DTV, DISH, DG, EQIX, MA, WAG, ARCP, GILD, LINTA, MON, FOXA, VC, AMZN, BRK.A, BRK.B, SUNE, CMCSA, JPM, MIC, CCI, HES, LAMR.
- A special call-out to Northstar Realty (NYSE:NRF), Visteon (NYSE:VC), SunEdison (NYSE:SUNE), Macquarie Infrastructure (NYSE:MIC), and Lamar Advertising (NASDAQ:LAMR) for making the list of hedge fund hotels despite their relatively tiny market caps.
PCLN vs. ETF Alternatives
Priceline Group Inc, formerly priceline.com Incorporated, is the online travel company which offers its customers various travel services, including hotel rooms, car rentals, airline tickets, vacation packages, cruises and destination services.
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