At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
Two months ago, I took a close look at Priceline.com (Nasdaq: PCLN), declared the stock's sell-off overdone, and argued the stock had finally returned "to a price at which it's worth owning." Then, like a dolt, I did ... nothing. Despite acknowledging that Priceline might "take off sooner than I expect," I sat on my hands, waiting "for an even bigger discount before buying."

Well, guess what? Priceline did take off, rocketing 21% in price in a matter of weeks. And guess what else? I missed the plane, and now it's too late to board -- or so say the analysts at ThinkEquity, citing:

  • Continued travel interruptions caused by May's volcanic malfunction in Iceland which could cause Priceline to miss estimates when it reports earnings next week
  • Slowing growth trends in U.S. online travel buying
  • The stock's remarkable climb in price over the past few weeks, which has left Priceline "more balanced," stock-price-wise.

ThinkEquity made discretion the better part of valuation yesterday, and downgraded the stock to "hold" lest its fears come to pass next week. (The analyst chopped its rating on Expedia (Nasdaq: EXPE) similarly, just in time to dodge any fallout from tomorrow's earnings report.) But is this banker right to be skittish? 

Let's go to the tape
Unlike most of the analysts we profile in this column, ThinkEquity doesn't fit neatly into a "best" or "worst" analyst-in-the-world box. It's record of 47% accuracy is just so-so. The good news, though, is that TE is a bit better than average in gauging the prospects of "Internet stocks" like Priceline:

Companies

ThinkEquity Said

CAPS Says

ThinkEquity's Picks Beating S&P by

Akamai Tech  (Nasdaq: AKAM)

Outperform

****

150 points

Blue Nile (Nasdaq: NILE)

Outperform

**

116 points

Vistaprint (Nasdaq: VPRT)

Outperform

*

100 points
This would seem to lend some support to its opinion on Priceline's prospects. Personally, I'd prefer to see how ThinkEquity does in predicting the performance of, say, airline stocks or hotel chains as more predictive of how its Priceline pick will play out -- but we work with what we've got. Publishing only a few dozen stock recommendations a year, as TE does, there's simply not as much data on the analyst as we'd like to have. 

What we do have, however, is data on Priceline.com, its valuation, and the general feeling on Wall Street about how fast it's likely to grow over the coming years. Based on the company's most recent reported earnings, we find Priceline selling for about 22-times earnings today, against expected growth of 19.4% annually. Trailing free cash flow almost perfectly mimics the company's reported earnings under GAAP, which is both a blessing and a curse. 
On the one hand, it tells us Priceline generates "high-quality earnings," and gives us confidence that it's numbers are reliable. On the other, well, the 1.1 PEG ratio on this stock still looks "just OK" to me. Certainly not expensive for the leading company in the Internet travel space -- but neither is it a screaming bargain.

Foolish takeaway
 Is there a buy argument to be made in Priceline's favor? Actually, there is. Viewed all on its lonesome, Priceline's 22-times earnings valuation may not look like much of an a bargain. But it's a far sight better than the valuations investors are showering upon other fast growers in the Internet space: 32-times earnings at Vistaprint, 55x at Akamai, and 57x at Blue Nile. And I certainly like Priceline better than most of the alternatives in the online travel space in particular. I mean, unprofitable Orbitz (NYSE: OWW)? Chinese flavor of the month Ctrip.com (Nasdaq: CTRP) at 53x earnings? Puh-leaze. 

I guess, when you get right down to it, deciding whether to buy Priceline into earnings next week, or tap the breaks as ThinkEquity advises, hinges on whether you think the leading company in online travel deserves a valuation closer to what its lesser rivals are charging -- or whether you believe it's those companies that are overpriced. So help a Fool out, will you? Take a look at Priceline today, then tell me: Is there still time to leap back in before earnings, or have I missed the boat (plane) already?