On Thursday, priceline.com (PCLN +0.60%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.
For years, Priceline has defied skeptics by taking a commanding lead in the online travel portal industry. The company has managed to find new ways to grow despite its already impressive size. Let's take an early look at what's been happening with Priceline.com over the past quarter and what we're likely to see in its quarterly report.
Stats on Priceline
|
Analyst EPS Estimate |
$5.27 |
|
Change From Year-Ago EPS |
23% |
|
Revenue Estimate |
$1.28 billion |
|
Change From Year-Ago Revenue |
23% |
|
Earnings Beats in Past 4 Quarters |
4 |
Source: Yahoo! Finance.
How Priceline aims to keep growing
In recent months, analysts have kept boosting their estimates on Priceline's earnings. With a $0.15 increase in first-quarter consensus and an upgrade of more than $1.10 per share for the full 2013 year, Priceline has managed to add about 6% to its lofty share price since the end of January.
Priceline has done an excellent job over the years of not just finding ways to grow but also finding the best avenues for growth. The company hasn't been afraid to cede less lucrative markets to other players, as Expedia (EXPE +0.32%) has more total gross bookings than Priceline. However, Priceline has been more selective about emphasizing higher-margin business like hotels in favor of lower-margin travel areas.
What has set Priceline apart is its global business. The company did a much better job than Expedia and its other competitors of setting up an international network of travel destinations, and its booking.com business has been immensely profitable in offering worldwide accommodations. That's a big reason why Orbitz (NYSE: OWW) has only recently managed to return to profitability, as despite its substantial revenue gains, Orbitz has almost no business outside North America.
Yet Priceline's international business is responsible for a delay in its merger with Kayak (NASDAQ: KYAK), as British regulators decided in March to look at the deal on antitrust grounds. Nevertheless, Kayak shareholders approved the merger, and with plenty of competitors worldwide, it's hard to envision an antitrust challenge holding up.
In Priceline's earnings report, watch for signs of a pickup in travel activity in Europe. With the economy having been weak there for a long time, an improving Europe could give Priceline a boost.
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