Priceline.com Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Priceline.com (Nasdaq: PCLN  ) rose nearly 12% in early trading and remained up more than 8% as of this writing. Last night, the online travel agent reported strong second-quarter profits and gave upbeat Q3 earnings guidance.

So what: Negotiating works. Second-quarter revenue rose 44% to $1.1 billion, while adjusted profit soared 79% to $5.49 a share. Analysts had been calling for just $4.87 a share on $1.07 billion in revenue, according to data compiled by Yahoo! Finance.

Now what: Guidance is what thrilled investors. Management told analysts to expect $9.10 to $9.30 in adjusted Q3 earnings, well above the $7.94 they had projected. Growth like that isn't easy to come by. So while I can't call Priceline.com cheap -- no stock trading for more than 25 times forward earnings ever is -- a 1.09 PEG ratio says this is a five-star stock trading at a three-star valuation. Do you agree? Disagree? Weigh in using the comments box below.

Interested in more info on Priceline.com? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of Priceline.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1534768, ~/Articles/ArticleHandler.aspx, 10/23/2014 7:59:02 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement