Tuesday, November 10, 2009

Priceline.com (PCLN) Hits an Earnings Home Run

I can't fight this feeling that.... I've totally whiffed when it comes to our holding in Priceline.com (PCLN).  Much like Baidu (BIDU) we had a great entry point early last spring, then took profit on a trade... and simple never went back in as we await some sort of pullback.  Our twins of missed opportunity.

Above is a 6 month chart; as you can see the last earnings report [Aug 10, 2009: Priceline.com - Recession Recsmession! Continued Impressive Results] created a massive gap in the chart... now unlike indexes, gaps in individual stocks can take months, quarters or years to fill; or in some cases they never do.  I think Priceline's will during the next real bear run but when that happens is anyone's guess.  You might notice 2 interesting things; first Priceline.com - like many stocks - broke down about 2 weeks ago... which (again) should of led to further downside but this is one very different market.  Second, what an "interesting" volume explosion last Thursday just 2 sessions ahead of an earnings release.  I'll leave it at that, and just remind you to remember you are sitting at the most tilted craps table at Caesars NYC.

The stock was up 7% in after hours, and will create a new gap up and new high; momentum bulls will jump over each other for that sort of technical action.  On a sidenote, I did not post it in the blog but Priceline.com was recently announced as a new member of the S&P 500.

Now for another barn busting earnings report; unlike many companies being bid to the stratosphere for nothing more than chopping countless jobs ... Priceline.com is beating through actual growth; our thesis here (now proven) is as the "Walmart of online travel" you'd see the a similar parallel as we see in retail in their US business.  Downward mobility has its good points. Let me remind you, if you are new to the website or name while Priceline is thought to be a US company (which it is) it has a very large business in Europe. Notice how domestic bookings are up at a decent clip year over year (recall a year ago we were in financial fall our shelters)... then compare to international growth.... pretty much a proxy for many things happening in the world.

Priceline.com Incorporated (Nasdaq: PCLN - News) www.priceline.com provides online travel services in 29 languages in 78 countries in Europe, North America, Asia, the Middle East and Africa. Included in the priceline.com family of companies is Booking.com, a leading international online hotel reservation service, priceline.com, a leading U.S. online travel service for value-conscious leisure travelers, and Agoda.com, an Asian online hotel reservation service. Priceline.com believes that Booking.com is Europe’s largest and fastest growing hotel reservation service, with a network of affiliated Web sites. Booking.com operates in over 70 countries in 24 languages and offers its customers access to over 73,000 participating hotels worldwide.

Full earnings report here - let's look at some analysis.

Per Briefing.com the quick hits:

  • Reports Q3 (Sep) earnings of $3.45 per share, $0.53 better than the First Call consensus of $2.92; revenues rose 30.1% year/year to $730.7 mln vs the $694 mln consensus.
  • Gross bookings were $2.7 billion, up 32.8% year over year.
  • Co issues upside guidance for Q4, sees EPS of $1.52-1.62 vs. $1.49 consensus. Year-over-year increase in total gross travel bookings of approximately 30% - 40%; Year-over-year increase in international gross travel bookings of approximately 50% - 60% (an increase of approximately 37% - 46% on a local currency basis); Year-over-year increase in domestic gross travel bookings of approximately 15%; Year-over-year increase in revenue of approximately 24% to 28%; Year-over-year increase in gross profit of approximately 40% to 45%; Pro forma EBITDA of approximately $98 million to $108 million.

Via Investors Business Daily
  • Priceline.com late Monday once again released quarterly results that soared far above analyst estimates, led by fast growth overseas. The company said its business was unusually strong this past summer. This was during perhaps the biggest global economic downturn since the Great Depression. But name-your-price Priceline's thing is low prices.
  • "Priceline is hitting all the right buttons," said Kaufman Bros. analyst Aaron Kessler. "Every facet of their business is executing well."
  • The company said gross travel bookings, the value of all travel services bought, soared 32.8% to $2.7 billion. Gross domestic bookings rose 24.9%, while international gross bookings jumped 37.8%. "They have been leading the online travel industry in executing their international expansion strategy."
  • Boyd said global hotel room night reservations grew by 56% in the third quarter, with strong performance in the U.S., Europe and Asia. Airline tickets sales rose 30.2%. Rental car days booked rose 11.6%.
  • Citigroup analyst Mark Mahaney said in a report last week that the number of unique U.S. visitors to Priceline.com surged 48% in the quarter compared with the year-earlier quarter and jumped 33% from the prior quarter. He says traffic to Priceline's Booking.com site, which books hotel rooms in Europe, jumped 52% from a year earlier and 29% from the prior quarter.  (wow!)  "This level of traffic growth is particularly impressive given the current economic environment," Mahaney wrote.
  • Mahaney says consumers led the surge. "Leisure travel -- unlike corporate travel -- is price elastic, and the recession has drawn more consumers to the Internet and to Priceline for the best deals," he wrote.  (bingo)

JPMorgan analyst extremely bullish this AM, also citing the outstanding international metrics. 
  • International markets now represent ~73% of gross profit dollars. We are particularly pleased that int’l is such a large portion of gross profit as we think this growth is much more sustainable than domestic growth. We see healthy growth in the international markets continuing due to 1) secular penetration growth, 2) new market entrance, 3) recovery of ADRs, 4) a more fragmented market which favors aggregators, and 5) modest take rate increases.
  • We are increasing our price target to $216. 

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

Long Priceline.com in fund; no personal position

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