Priceline.com's
The latest results for 2003 reveal a company that's gotten lean and mean, despite a dip in revenues. Fourth-quarter gross bookings were up, although revenues were down 8.7% compared to last year. But the company managed to reverse last year's loss of $0.20 a share and posted earnings of $0.06.
Management said results were buoyed by the firm's new airline ticket service, which allows disclosed itinerary fares, akin to the service offered by rivals Orbitz
For the full year, Priceline.com notched earnings of $0.27 a share, against 2002's $0.57 loss. Nicely done. But I suggest that prospective shareholders should keep an eye on the revenues, which were down 13.9% to $863.7 million.
Making money on shrinking sales is great, but making money on more is better. And even a third-grader can do this math. Priceline's trailing P/E currently runs north of 90. Estimates of $0.75 for 2004 put it at a forward P/E of 33. That's cheap if you believe the near 200% growth assumed in that read of the tea leaves. But it looks pricey for a company with flagging sales that competes in a cutthroat arena like discount travel. Choose your path wisely.
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Motley Fool contributor Seth Jayson thinks Priceline's next ad should reprise the famous Star Trek "Amok Time" episode, and let Bill and Leonard fight it out for the spokesman slot. He does not own shares of any company mentioned in this article.