Priceline Overshoots the Runway
By
Rick Aristotle Munarriz
August 6, 2008
|
It's a shame that most airlines aren't run like Priceline.com (Nasdaq: PCLN).
Once again, the travel website has landed ahead of schedule, delivering its ninth consecutive quarter of better-than-expected profits. Revenue soared 44% to $514.0 million. Pro forma net income ascended 40% to $1.55 a share. Wall Street was buckled in for just $1.41 a share in adjusted earnings on $495.7 million in revenue.
Priceline has made success a habit. It doesn't simply buzz the control tower every three months -- it flat-out overshoots expectations by a wide margin.
| |
EPS
|
Est.
|
Difference
|
|
Q3 2007
|
$1.58
|
$1.28
|
23.4%
|
|
Q4 2007
|
$0.96
|
$0.84
|
14.3%
|
|
Q1 2008
|
$0.76
|
$0.60
|
26.7%
|
|
Q2 2008
|
$1.55
|
$1.41
|
9.9%
|
Source: Earnings.com
The stock opened 13% lower this morning, despite besting the perpetually humbled pros by nearly 10%. It may be that spoiled investors have grown used to bigger surprises. It may be that the shares rallied heading into the report. It may also be that the company upped its guidance for the rest of the year, but did so in a cautionary tone as the online travel industry bumps up against economic weakness and airlines scaling back on their flight schedules.
The market's reaction is a pity, because Priceline -- and to a lesser extent Expedia (Nasdaq: EXPE) -- have become the two online travel sites that investors can rely on to deliver healthy growth these days. Travel-deals publisher Travelzoo (Nasdaq: TZOO) disappointed investors with another hideous report last month. Orbitz Worldwide (NYSE: OWW) posted disappointing results this morning, after its numbers weren't ready in time for its originally scheduled call on Monday. Orbitz even had to cancel an investing conference appearance because of the lapse. The results weren't worth waiting for, with another quarterly loss on a mere 1% top-line uptick.
Sure, investors can find growth in online travel overseas. In China, you have Ctrip.com (Nasdaq: CTRP) as the growth-stock darling and eLong (Nasdaq: LONG) as the slower value play.
However, investors can also get a little global sizzle with Priceline. More than $1.2 billion of the $2.1 billion in gross travel bookings made by Priceline during the second quarter were international.
So go ahead and let Mr. Market delay Priceline's flight today. It still knows where the runways are, giving investors an attractive entry point ahead of next quarter's report.
Other ways to fly higher:
Closed for 15 months – opening 10 days only! Get notified ahead of time as our expert portfolio manager invests $1 MILLION in the best opportunities from across The Motley Fool’s premium investment services. This is the first open since August 2008, by invitation only. Enter email below.
Terms & Conditions
RSS Headlines
Fool UK