North America

Earnings Preview: Priceline Q2 2017 (PCLN)

By: Craig Bowles

Overview

Priceline Group, Inc. (PCLN) is slated to report 2Q 2017 earnings after the bell on Tuesday, August 8th. 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.

Outliers & Strategy

Key measures:

  • Non-GAAP Earnings Per Share (EPS): Company guidance is a range of $13.30 to $14.00. The current Street estimate is $14.18. (Source: Yahoo! Finance) Consensus was $14.93 three months ago.
  • Revenues: Analysts expect an increase of 16.7% y/y to $2.98 bln. Consensus was $3.01 bln three months ago.
  • Gross Travel Bookings: Company guidance is 12% to 17% y/y growth or a range $20.005 bln to $20.899 bln.
  • Adjusted Earnings Per Share (EPS) Guidance for 3Q2017: The current Street estimate is $34.09 (range $31.55 to $36.92).
  • Revenues Guidance for 3Q2017: Analysts expect an increase of 15.1% y/y to $4.25 bln (range $4.05 bln to $4.42 bln).
  • Priceline’s P/E of 45.7 compares to a 5-year average of 28.5; P/B 9.2 compares to a 5-year average of 8.7; P/S 9.2 compares to a 5-year average of 7.7; P/CF 25.6 compares to a 5-year average of 23.2.
  • Analysts view Priceline with 24 Buy, 5 Hold, and 0 Sell ratings. (source: MarketBeat.com)
  • Insiders sold 1,133 shares over the last three months and a net 36,319 shares in the past year. (source: NASDAQ.com) PCLN had $4 bln authorized for buybacks in February 2017 after using $1 bln in 2016 and $3 bln in 2015.
  • 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 6.61%. Options are pricing in an implied move of 4.40% off earnings.

Recent News

  • 07/18: The European Commission approved The Priceline Group Inc.’s $550 mln deal to take over Momondo Group that runs Cheapflights, according to a post on Zacks.com.
  • 06/21: Needham reiterated a Buy rating on Priceline but believes the market is underestimating the negative global publicity tied to the February 2017 US travel ban, even though US courts have stymied implementation, according to a post on StreetInsider.com.
  • 06/06: Euromonitor, a market research company, reported accommodation booking online was only at 35% in 2015 and rising at around 3% each year suggesting Priceline’s business model has plenty of room to run, according to a post on Fool.com.
  • 05/11: Jefferies reiterated a Buy rating on The Priceline Group noting that booking.com keeps gaining market share, Priceline.com started seeing investments pay off, Rentalcars.com accelerated growth 3rd qtr in a row, Kayak delivered good margins, and Agoda saw solid bookings growth driven by direct channel, according to a post on StreetInsider.com.

Technical Review

Priceline’s stock continues to make new all-time highs the past year and hit $2043.95 in July but had been basically flat the two years before. Ramp-ups happened previously in 2011 and 2013 just before entering consolidation periods. Balance area support can be found starting at $1880 in the event of a retracement. (Chart courtesy of StockCharts.com)

Summary

Since his appointment in December, Priceline’s new CEO Glenn Fogel has had a smooth transition so far it appears. Insiders lightened up their selling the past six months with the stock making new all-time highs. $4 bln was available for stock buybacks in February 2017. The company has beaten estimates by an average of $1.18 the last four quarters. Estimize consensus for a Non-GAAP EPS of $14.45 on revenue of $3.011 bln compares to analyst consensus of $14.18 on revenue of $2.98 bln. Gross bookings at around the high side of guidance of $20.899 bln would normally be bullish. Traders would then focus on Q3 guidance.

 

DISCLAIMER:  By using this report, you acknowledge that Selerity, Inc. is in no way liable for losses or gains arising out of commentary, analysis, and or data in this report. Your investment decisions and recommendations are made entirely at your discretion. Selerity does not own securities in companies that they write about, is not an investment adviser, and the content contained herein is not an endorsement to buy or sell any securities. No content published as part of this report constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.