Monday, August 10, 2009 (PCLN) - Recession Recsmession; Continued Impressive Results

TweetThis (PCLN) has to be among the handful of stocks that has impressed me the most the past 18 months. It's relative (and absolute) performance during this downturn - for a company levered to the travel industry and consumer - has been ovation worthy. Many don't realize they have a large exposure to Europe so some of the weakness in the American consumer has been mitigated but even in the U.S. they have performed well. Today we have yet another "beat and raise"...

Unfortunately we were stopped out of this name in early July on a break of long term support, and with my attention elsewhere I never re-acquired a material position so we've been watching this move mostly from the sidelines in regards to PCLN. So while I am happy at the continued success in identifying companies who are going up WITH good fundamentals (not despite bad ones) we have not gained much in the pocket book with this one in the past 6 weeks.

The company beat expectations by 27 cents, and guided Q3 revenue and EPS above analysts consensus. They now see Q3 at $2.70 - $2.85 versus expectations of $2.52 with revenue growth of 19-23% year over year. It now seems feasible the company can put in a $7 EPS year and frankly in this market - where many stocks have no earnings to speak of, and others trade at 60, 70, 80x forward estimates on hopes that a V shaped recovery will make the price seem cheap in 12 months, this is STILL a bargain at 20ishx forward estimates. These guys are simply trouncing the Expedia's (EXPE) of the world.

Via AP
  • Online travel company Inc. said Monday its second-quarter profit and sales grew, boosted by stronger-than-expected leisure travel demand despite the bad economy.
  • Revenue rose 18 percent to $603.7 million from $514 million.
  • The company earned $67 million, or $1.38 per share, up 35 percent from $49.8 million, or $1 per share, in the same period a year earlier. Excluding items, the company earned $2.02 per share in the latest quarter. Analysts, on average, were expecting a profit of $1.75 per share, excluding items, on sales of $575.1 million, according to a poll by Thomson Reuters.
  • "Despite a difficult economic climate, leisure travel demand for the summer peak season has been stronger than expected, driven in part by the availability of compelling discounts," said President and CEO Jeffery H. Boyd in a statement. The quarter's results, he added, reflect improving demand but also show the effect of lower unit-prices when compared with a year earlier.
  • For the third quarter, the company expects a profit of $2.15 to $2.30 per share and adjusted earnings of $2.70 and $2.85 per share. It expects revenue to grow by about 19 percent to 23 percent.
  • Analysts, on average, are expecting a profit of $2.52 per share on sales of $613.5 million, up about 19 percent from year-ago sales of $514 million.
  • Priceline also expects gross travel bookings to increase by about 20 percent to 26 percent.
  • The Company noted that because of the uncertainty of consumer behavior as a result of the worldwide recession, its actual performance during the 3rd quarter 2009 against the guidance above continued to be subject to greater variability than it had been in the past.
Full report here.

[May 14, 2009: in Investors Business Daily]
[May 11, 2009: Continues to Execute Well]
[Feb 19, 2009: Impresses on Earnings]
[Aug 6, 2008: - Down 17% on Good Earnings?]
[May 8, 2008: 2 Earnings Reports of Note: AIG (AIG) and Priceline (PCLN)]

Long in fund; no personal position

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