It's deja vu for shareholders of online travel agent conglomerate Booking Holdings (BKNG 1.43%). Fourth-quarter 2018 results exceeded guidance (again), but investors chose to fret over lower-than-expected forecast to kick off the new year (again). Shares are down 10% as of this writing after the disappointing report card.

The stock has been bounced around like this for over a year now, even though the and parent keeps posting impressive growth in an increasingly crowded travel industry. Management continues to warn that a slowdown is inevitable, but plenty of growth remains over the long term -- and shares are starting to look downright cheap.

First, a full-year recap

Booking Holdings has been calling for a cool-off for some time because of its massive size, and while headline growth rates have in fact fallen from years past, actual results have always topped guidance. The fourth quarter of 2018 was just the latest that's happened. Total gross travel bookings (the value of all accommodations reserved on the company's websites) came in at the very top of guidance at 9%, as did revenue growth at 16%. The real kicker was earnings adjusted for one-time items, which grew 33% year over year to $22.49, handily beating guidance given during the last report.

It all added up to a great year for the travel company, especially considering it's valued at $80 billion.


Full-Year 2018

Full-Year 2017

YOY Change

Gross travel bookings

$92.7 billion

$81.2 billion



$14.5 billion

$12.7 billion


Operating income

$5.34 billion

$4.54 billion


Earnings per share




Adjusted earnings per share




YOY = year over year. Data source: Booking Holdings.

Check out the latest earnings call transcript for Booking Holdings.

What the top team had to say

So what was the problem? Investors are back to fretting over guidance, although some worry is granted given that Booking is showing signs of further slowdown. Total gross travel bookings are expected to be flat year over year, as is revenue. Adjusted earnings could fall 7% to 9% compared with a year ago.

2018 was a strong year for global travel and will be an especially difficult period to lap. Plus, the global economy has been losing steam, and the government shutdown here in the U.S. and other political tensions brewing around the world aren't helping. Europe in particular was called out as a sore spot during management's discussion on the earnings call. The bottom line is also getting bogged down with elevated spending to foster the next wave of expansion.

In talking about some of those investments, CEO Glenn Fogel had this to say:

We invested in 2018 -- and, in 2019, will step up our investment -- in the growth of our business through branding and customer acquisition programs in order to take share in the markets with the highest long-term potential returns. We believe these incremental investments will help drive greater loyalty and higher repeat rates to our direct channel over time. Just two days ago, we launched our new U.S. brand campaign, which we expect will drive further awareness in this important growth market. We will also look to improve brand awareness across our primary markets through increased brand campaigns in both offline and online channels. 

A couple, with their hands clasped behind their heads, sitting on beach chairs.

Not how Booking Holdings investors are feeling at the moment. Image source: Getty Images.

One cheap stock

That increased marketing spend, paired with other investing activity in Asia and the continuous rollout of Bookings payment platform for merchants, is leading to the lower profit outlook for the immediate future. However, because the stock hasn't gained any upward traction while the bottom line has run higher in the last year, Booking looks like a pretty good deal right now. Price to free cash flow (money left over after basic operations and capital expenditures are paid for) is just 16.7 times. That's the cheapest shares have been since the financial crisis a decade ago.

The upshot here is that, while growth has stalled out for now, online travel -- and global travel in general -- is still on the rise. Booking Holdings has demonstrated it is the leader in the space for a reason, able to navigate both economic problems and an increasingly competitive online landscape. As always, following investor panic after the earnings report, the pullback in shares looks like a gift to those looking for a value.