Is Priceline Still a Winner?

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With shares of Priceline.com Incorporated (NASDAQ:PCLN) trading at around $700.16, is PCLN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Priceline has made many investors very happy through the years. What about those new to the party? Have they arrived too late? Traffic on Priceline.com has improved over the past several months, but that doesn’t guarantee improved growth. Let’s take a look at some positives and negatives for Priceline before looking at some comparative numbers.

Positives:

  • Analysts love the stock: 22 Buy, 4 Hold, 0 Sell
  • Recently made strategic acquisition (Kayak)
  • Consistent gross booking improvements
  • Consistent revenue and earnings improvements on annual basis
  • Margin expansion
  • Impressive ROE (see chart below)
  • Quality debt management
  • Performing well internationally
  • Untapped growth potential internationally
  • Aggressive advertising campaign is paying off

Negatives:

  • Stock not resilient in bear markets
  • Increased customer acquisition costs
  • Increased competition (see Trends section)
  • Currency fluctuations might impact earnings

The chart below compares fundamentals for Priceline, Expedia Inc. (NASDAQ:EXPE), and Orbitz Worldwide (NYSE:OWW). Priceline has a market cap of $34.93 billion, Expedia has a market cap of $7.70 billion, and Orbitz has a market cap of $637.99 million.

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PCLN

EXPE

OWW

Trailing   P/E

25.32

44.35

N/A

Forward   P/E

15.26

13.80

15.97

Profit   Margin

26.98%

4.24%

-38.74%

ROE

42.14%

7.28%

-3378.55%

Operating   Cash Flow

$1.79 Billion

 $1.27 Billion

  $107.06 Million

Dividend   Yield

N/A

0.90%

N/A

Short   Position

N/A

11.30%

N/A

 

Let’s take a look at some more important numbers prior to forming an opinion on this stock.

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