Thursday, February 19, 2009

Priceline.com (PCLN) Impresses on Earnings

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The big boys have finished their earnings for the most part and now the more interesting fare in the mid and small cap arenas are up... so a lot of interesting names for us to review.

I continue to favor Priceline.com (PCLN) as the budget alternative for travel bookings as I wrote in December [Dec 19: Priceline Back on My Radar], and when you compare their results versus a company such as Expedia (EXPE) you see the quality shine through. Plus, any company with William Shatner behind it must be respected.

These are also good companies to review for economic reasons - much better gauges on the health of consumers in Europe and the U.S.; rather than relying on faulty government reports.

Expedia...
  • Expedia Inc. reported a fourth-quarter loss of $2.76 billion on Thursday, mostly because of a hefty write-down in the market value of the company's assets. The online travel company reported a loss of $9.60 per share, after a profit of $65.4 million, or 22 cents per share, a year earlier. The $3 billion write-down of goodwill and intangible assets was mostly related to the company's acquisitions of hotels.com, Expedia.com and Hotwire.
  • Excluding the write-down and other items, net income was $64.9 million, or 22 cents per share, compared with $97.5 million, or 32 cents per share, a year ago. Analysts surveyed by Thomson Reuters expected profit of 24 cents per share.
  • For the period ended Dec. 31, revenue slipped 7 percent to $620.8 million from $665.3 million largely on lower global merchant hotel and air revenue.
  • Quarterly gross bookings fell 11 percent, with North American bookings down 13 percent and European bookings off 11 percent.
  • Some individuals have decided to forgo their usual vacations during the recession, while others have planned cheaper trips, shorter jaunts or "staycations," which can include vacations or day trips close to one's home.
versus....

Priceline.com results - they beat by a whopping 24 cents
  • Shares of Priceline.com Inc. surged in premarket trading on Thursday after the online travel retailer's adjusted fourth-quarter profit beat Wall Street's expectations and the company issued a better-than-expected first-quarter outlook.
  • Late Wednesday, Priceline reported that its quarterly earnings rose 1 percent to $33.3 million, or 73 cents per share. Excluding some one-time items, quarterly earnings per share totaled $1.29. Priceline's revenue jumped 21 percent to $406 million.
  • Analysts polled by Thomson Reuters, who generally exclude special items, expected a profit of $1.05 per share on revenue of $377.8 million.
  • Priceline's fourth-quarter gross travel bookings grew 31 percent in the U.S., while international bookings, excluding the impact of foreign currency translation, rose 28 percent.
  • KeyBanc Capital Markets analyst Scott W. Hamann attributed the company's domestic bookings growth to consumers searching for travel bargains, mostly through the company's "Name Your Own Price" model.
  • "Additionally," he said, "we believe that domestic gains in air tickets, hotel room nights and rental car days sold were largely a result of the company's well-recognized advertising campaign, featuring William Shatner as the Negotiator, as well as (Priceline's) enhanced inventory selection and reduced/eliminated booking fee structure."
  • "Despite the macroeconomic slowdown, we expect Priceline to continue to grow through domestic market share gains and a dominant international business," said Piper Jaffray analyst Michael J. Olson in a note to investors. "Additionally, we believe management will manage the business to increase or maintain margins."
Guidance
  • The Norwalk, Conn.-based company expects first-quarter revenue growth of 5 to 10 percent and adjusted earnings of between 85 cents and 95 cents per share. Analysts forecast earnings of 81 cents per share.
It is like reading about companies in 2 different sectors. Kudos to Priceline.com and I wish I had stuck to my thesis and bought in at some point. I sort of lost track of this name in my watch lists - only so many names one can watch closely. The stock has gapped up this morning right to its 200 day moving average.

[Aug 6, 2008: Priceline.com - Down 17% on Good Earnings?]
[May 8, 2008: 2 Earnings Reports of Note: AIG (AIG) and Priceline (PCLN)]

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