Priceline.com (NASDAQ:PCLN) is set to report FQ1 2014 earnings before the market opens on Thursday, May 8th. Priceline.com is an online travel reservations website which has beaten the earnings expectations from Wall Street in each of the past six quarters. There are high expectations that customers booking travel plans on mobile devices will bolster Priceline.com's earnings this quarter. Wall Street is looking for an increase in earnings of $1.09 per share and a 25% gain in year over year revenue. While the consensus is that robust earnings growth will be reported, the stock has not been doing so well. Here's what investors expect from Priceline on Thursday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Priceline.com to report $6.85 EPS and $1.632B revenue while the current Estimize.com consensus from 41 Buy Side and Independent contributing analysts is $7.15 EPS and $1.660B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Priceline.com to beat EPS estimates from Wall Street by 30 cents per share and $28 million in revenue.
Over the past six quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Priceline.com's EPS and revenue in every single quarter. By tapping into a wider range of contributors including hedge fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.
More importantly it does a better job of representing the market's actual expectations.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a larger than usual differential between the EPS expectations from Estimize and Wall Street and an average differential in revenue.
The distribution of estimates published by analysts on the Estimize.com platform range from $6.50 to $7.84 EPS and from $1.580B to $1.800B in revenues. This quarter we're seeing a larger than usual range of estimates on Priceline.com than usual.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of EPS estimates signals less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter the Wall Street EPS consensus fell from $7.26 to $6.85 while the Estimize consensus also dropped from $7.54 to $7.15. Meanwhile the Wall Street revenue consensus sank early in the period before flattening out at $1.632B while the Estimize consensus decreased from $1.730B to $1.660B. Timeliness and the directionality of analyst revisions are often a leading indicator, however the consensuses from Estimize and Wall Street are flat going into the earnings report.
The analyst with the highest estimate confidence rating this quarter is WallStreetBean who projects $7.35 EPS and $1.675B in revenue. WallStreetBean is ranked 10th overall among over 4,400 contributing analysts. This season WallStreetBean has been more accurate than Wall Street in forecasting EPS and revenue 55% and 53% of the time, respectively, throughout 58 estimates.
Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case WallStreetBean is making a bullish call expecting Priceline.com to beat expectations from both Wall Street and Estimize.
Despite the very high fundamental growth expectations for Priceline.com the stock has been selling off alongside other web companies with high price to earnings ratios like Twitter (NYSE:TWTR) and Amazon.com (NASDAQ:AMZN). This quarter the market as represented by the Estimize.com community is expecting Priceline to beat the Street by 30 cents per share in earnings and $28 million in revenue. The earnings bar has been set high for Priceline. We'll see if they can live up to it in the morning.