Priceline Group Inc. Takes Off Again in Its Latest Quarter

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Online travel sites continue to be friendly skies for Priceline Group  (NASDAQ: PCLN  ) . The parent company of, Kayak,, and now OpenTable posted another quarter of healthy growth on Monday.

Priceline saw its revenue climb 26% to $2.1 billion in the second quarter, fueled by a 34% spike in gross travel bookings. Good things happen when you book 90 million room nights in a quarter, and Priceline's recent push into everything from villa rentals to local restaurant reservations is making it a bigger part of any travel experience. 

Adjusted earnings rose 31% to $667 million, or $12.51 a share. Analysts only anticipated adjusted profit of $12.04 a share, but the bottom-line surprise really shouldn't be a surprise anymore. Priceline routinely lands ahead of Wall Street's profit targets. Check out just the past year of adjusted earnings relative to what the prognosticators were expecting.


EPS Estimate



Q3 2013




Q4 2013




Q1 2014




Q2 2014




Source: Thomson Reuters.

Priceline may have gotten its start attracting penny pinchers with its namesake "name your own price" portal, but it has evolved into a global juggernaut by acquiring Europe's and making an enhanced push into Asia with its recent $500 million convertible bond investment in China's (NASDAQ: CTRP  ) . The majority of the dot-com darling's gross travel bookings are actually generated internationally. Its $2.6 billion deal for restaurants reservation hub OpenTable closed late last month, so naturally it didn't play a role in Priceline's blowout quarter. 

Seasonality is high in the travel industry, making Priceline's guidance for the current quarter -- peak tourism season -- equally important. Monday's guidance was mixed on that front. The company sees revenue for the third quarter climbing 15% to 25% on a 19% to 29% uptick in gross travel bookings. Adjusted earnings per share should clock in between $19.60 and $21.10. Wall Street was perched at the high end of these ranges, but Priceline has proved in the past that it is conservative in issuing guidance. 

Priceline's forecast calls for decelerating growth, but keep in mind that the Kayak acquisition closed in May of last year. The past four quarters benefited from the inclusion of the travel rate aggregator, but now the growth will be organic. 

Strong earnings followed by mixed guidance can be a recipe for disappointment, but investors took Priceline's performance well. The stock moved 2% higher on Monday following the report and earnings call.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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