North America

Earnings Preview: Priceline Q1 2017 (PCLN)

By: Craig Bowles

Overview

Priceline Group, Inc. (PCLN) is slated to report 1Q 2017 earnings after the bell on Tuesday, May 9th. The earnings release is expected at approximately 4:00 p.m. ET followed at 4:30 p.m. with a webcast presentation available through Priceline Investor Relations. The company is one of the top global online hotel reservation services and could therefore influence direction of the index futures and other broad market gauges.

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Outliers & Strategy

Key measures:

  • Non-GAAP Earnings Per Share (EPS): Company guidance is a range of $8.25 to $8.65. The current Street estimate is $8.89. (Source: Yahoo! Finance) Consensus was $10.62 three months ago.
  • Revenues: Analysts expect an increase of 14.0% y/y to $2.45 bln. Consensus was $2.45 bln three months ago.
  • Gross Travel Bookings: Company guidance is 17% to 22% y/y growth or a range $19.484 bln to $20.317 bln, so the midpoint is $19.900 bln.
  • Adjusted Earnings Per Share (EPS) Guidance for 2Q2017: The current Street estimate is $14.96 (range $12.82 to $16.59).
  • Revenues Guidance for 2Q2017: Analysts expect an increase of 17.9% y/y to $3.01 bln (range $2.86 bln to $3.15 bln).
  • Priceline’s P/E of 44.8 compares to a 5-year average of 28.5; P/B 9.6 compares to a 5-year average of 8.7; P/S 8.9 compares to a 5-year average of 7.7; P/CF 24.4 compares to a 5-year average of 23.2.
  • Analysts view Priceline with 25 Buy, 5 Hold, and 0 Sell ratings. (source: MarketBeat.com)
  • Insiders sold 5,079 shares over the last three months and a net 36,580 shares in the past year. (source: NASDAQ.com) Stock buybacks: 2016 $1 billion, 2015 $3 billion.
  • Priceline, Expedia (EXPE) and now Alphabet (GOOGL) are the top global online travel agents. Results could also impact other online travel agents, such as Ctrip (CTRP), Travelzoo (TZOO) and TripAdvisor (TRIP).
  • Priceline has a 1-day average price change on earnings of 6.73%. Options are pricing in an implied move of 4.30% off earnings.

Recent News

  • 04/18: Cowen maintained an Outperform rating on The Priceline Group and increased its price target following a board industry review of online travel trends ahead of the upcoming first quarter report. PCLN can leverage repeat business from the large new customer base, while high exposure to European hotels will be a tailwind for management in 2017, according to a post on StreetInsider.com.
  • 04/18: Macquarie maintained an Outperform rating on The Priceline Group and increased its price target on expectations the company will report room night bookings at or above the high end of the guidance range (164-171 million nights) and sees adj. EBITDA above the top end of prior guidance range ($550-$580 million), according to a post on StreetInsider.com.
  • 04/13: Oppenheimer maintained an Outperform rating on The Priceline Group and increased its price target while citing improving software and China exposure provide runway to achieve 20% plus room growth in the medium term, according to a post on StreetInsider.com.
  • 04/12: Cantor Fitzgerald reiterated an Outperform rating on The Priceline Group following 1Q checks. Checks suggest that PCLN’s room nights growth and bookings likely tracked toward the upper end of management’s guidance, according to a post on StreetInsider.com.

Technical Review

Priceline’s stock continuing to make new all-time highs in what had been a seasonally weak Q1 was impressive but the stock had been basically flat for two years. This happened previously in 2011 and 2013 just before entering consolidation periods. Point and figure technicians have already met their bullish price objective of $1889 and the previous balance area is around $1760. (Chart courtesy of StockCharts.com)

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Summary

Priceline’s new CEO Glenn Fogel has had a smooth transition so far it appears. Insiders lightened up their selling the past three months despite the stock making new all-time highs. Another buyback announcement would seem unwarranted given the stock’s performance and the company still had another $500 million left from the previous plan entering 2017. The company has beaten estimates by an average of $1.20 the last four quarters. Estimize consensus for a Non-GAAP EPS of $9.14 on revenue of $2.453 bln compares to analyst consensus of $8.89 on revenue of $2.45 bln. Gross bookings at around the high side of guidance of $20.317 bln would be of interest. Traders would then focus on Q2 guidance.

 

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