Please ensure Javascript is enabled for purposes of website accessibility

Why Booking Holdings Stock Just Popped 7%

By Rich Smith – Aug 8, 2019 at 1:12PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales and earnings beat, and earnings guidance is ahead of expectations, too.

What happened

Shares of Booking Holdings (BKNG -1.84%) stock -- the company formerly known as Priceline -- are surging, up 7.3% at $1,955 (yes, you read that right) as of 12:40 p.m. EDT Thursday after the purveyor of online reservations for hotels and plane tickets reported estimate-busting earnings for its fiscal second quarter of 2019 last night.  

Expected to earn $22.71 per diluted share on sales of $3.85 billion, Booking instead reported that it earned $23.59 (pro forma) on sales of $3.9 billion, a clear earnings "beat."

Green arrow trending up over the numerals 2019

Image source: Getty Images.

So what

Well, maybe not entirely clear. When calculated according to generally accepted accounting principles (GAAP), Priceline's earnings for the quarter were actually only $22.44 -- and to its credit, this is the number that Booking Holdings highlighted in its report. GAAP profits grew 11% year over year, faster than the company's 9% sales growth.

That being said, Wall Street analysts like to back out certain items from earnings reports, making it easier for companies to "hit their numbers." They gave their estimates for Booking's profits in pro forma format -- and Booking dutifully "beat earnings" by that same standard.

Now what

And things should only get better from here, at least from the perspective of profits. As CEO Glenn Fogel pointed out in Booking Holdings' report, the company is now preparing to move from "a solid start to the summer travel season" and transition into "our peak travel season" -- when the money should really flow.

In the third quarter, Booking believes it could earn anywhere from $42.60 to $43.60 per share (GAAP) and from $43.60 to $44.60 (pro forma), with sales up anywhere from 4% to 6% over Q3 2018 levels. Taken at the midpoint, that pro forma guidance exceeds the $43.97 per share that Wall Street will be looking for, though Booking's sales guidance is below the 8% growth Street analysts predict.

How will Wall Street react if that per-share result happens? Tune in three months from now to find out.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Booking Holdings Stock Quote
Booking Holdings
BKNG
$1,726.71 (-1.84%) $-32.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.