Welcome to the Stock of the Day.
Shares of Priceline.com (PCLN) broke through an all-time high after it posted Q4 results. Where will the online travel booking company go from here?
Find out now.
Priceline.com allows buyers to name their own price for everything from airline tickets to rental cars to cruises. With its patented business model, the company generates virtually all of its sales from travel-related services.
In the case of airline tickets and hotel reservations, Priceline.com keeps the difference between the price paid by the individual and what Priceline.com paid for the ticket or hotel room. With travel options in 295,000 accommodations across 175 countries, Priceline brought in $6.8 billion in sales in FY 2013.
In the fourth quarter, Priceline’s international business increased across the board, including bookings for flights, car rentals and hotel rooms. Total gross bookings advanced 38.8% over last year while international bookings jumped 41.2%. This translated to net earnings of $3.78 million on revenue of $1.54 billion. Adjusted earnings were $8.85 per share. Analysts had expected $8.29 EPS on $1.52 billion in sales so Priceline posted a 7% earnings surprise and a modest sales surprise.
Looking ahead to the first quarter, the company expects net earnings in a range of $5.02 to $5.52 per share and adjusted earnings in a range of $6.35 and $6.85 per share. Priceline also anticipates 15% to 25% sales growth over Q1 2013.
The Street view calls for adjusted earnings of $7.19 per share on 27% sales growth, so Priceline’s forecast was slightly below analyst predictions.
Even so, this was a strong report overall so PCLN shares gapped up at today’s open.
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. PCLN shares have made a 180 in the past year–as recently as last April this was a D-rated sell. Since then the stock has improved on a few fronts.
First, institutional buying pressure has returned to PCLN, indicating that the stock’s risk-to-return ratio is now much stronger. Second, the company has firmed up its financials in a big way: It received As and Bs for every single fundamental metric I graded it on.
PCLN receives a B for it Fundamental Grade and an A for its Quantitative Grade.
Bottom Line: As of this posting I consider Priceline stock an A-rated Buy.
Would you like to check the fundamentals backing up one of your stocks? For more stock grades, please visit my Portfolio Grader website!