Priceline.com
Shares rose 17% on Thursday, after the company posted blowout quarterly results. Revenue climbed 21% to $406 million and would have been even higher if it wasn't for setbacks in currency exchange rates. Earnings on a pro forma basis increased 34% to $1.29 a share.
Wall Street was expecting a profit of only $1.05 a share, but what else is new? Priceline has now obliterated analyst profit targets in each of the past 11 quarters. It hasn't even been close lately.
|
EPS |
Estimated |
Difference |
|
|---|---|---|---|
|
Q1 2008 |
$0.76 |
$0.60 |
27% |
|
Q2 2008 |
$1.55 |
$1.41 |
10% |
|
Q3 2008 |
$2.39 |
$2.10 |
14% |
|
Q4 2008 |
$1.29 |
$1.05 |
23% |
Source: Earnings.com.
Consistently thumping Mr. Market by a double-digit percentage is puzzling, especially while most of the other travel portals are struggling. Rival Expedia
One might assume that Priceline's flagship travel-bidding service is benefiting from a penny-pinching economy, but that isn't enough of an explanation. If success was handcuffed to vacation deals, travel publisher Travelzoo
In short, Priceline is thriving by swiping market share from competing portals like Expedia and Orbitz Worldwide
Priceline's management sees growth decelerating during the current quarter, with pro forma profitability projected at $0.85 a share to $0.95 a share. Don't worry. Low-balling analysts are targeting earnings of only $0.81 a share.
You can already figure out how this will play out. Analysts will scramble to raise their guesstimates, with a good chance that they will aim too low again.
In one of my favorite William "The Negotiator" Shatner ads, he's goading a Priceline customer into not overbidding for a stay.
"Namby-pamby," he says. "Go lower."
So I guess it's time to turn the tables on the analysts, hoping that they'll finally get it right.
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