Pcln Valentine
Image: Priceline.com.

For years, Priceline Group (NASDAQ:PCLN) has managed to produce stellar growth seemingly irrespective of global economic conditions. Lately, though, investors have started to worry about the potential impact of a slowdown on the online travel industry, and shares of Priceline and rival Expedia (NASDAQ:EXPE) have both been under pressure.

With Priceline slated to announce its fourth-quarter results on Wednesday, investors want to see tangible signs that its fundamental strength will continue to produce faster revenue growth and higher earnings into the future. Let's look more closely at the latest happenings for Priceline Group over the past few months, and what investors should expect in its fourth-quarter report.

Stats on Priceline Group

Analyst EPS Estimate

$11.81

Change From Year-Ago EPS

8.8%

Revenue Estimate

$1.96 billion

Change From Year-Ago Revenue

6.4%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Priceline Group earnings sustain their winning streak?
Investors are coming into the fourth-quarter report with increasing nervousness about Priceline's earnings potential, as they've reduced their quarterly estimates by more than $.10 per share, and more importantly, have cut 2016 projections by nearly $1 per share. The stock has taken a beating, falling 27% since early November.

A substantial part of the plunge in Priceline's share price came after its third-quarter report. The company's backward-looking results were solid, showing 9% growth in revenue and a 13% jump in GAAP net income producing an earnings beat of more than $1 per share. Even more impressive was Priceline's ability to grow despite huge hits due to weak foreign currencies that cut gross travel bookings growth by 15 percentage points. Yet Priceline's future guidance sent shockwaves throughout the industry, hitting not just Priceline, but also Expedia and other players in online travel.

Yet nothing in the Priceline report changed the fundamental strengths of the business. The size of the online travel leader's core Booking.com accommodation website dwarfs Expedia's available properties. The positive network effects of having the dominant hotel-booking service induces other hotel operators to join, and that has even put Priceline in a position in which it can afford to place excess capacity on rival website TripAdvisor's (NASDAQ:TRIP) Instant Booking platform without feeling that it is giving away a competitive advantage.

Moreover, Priceline sees the Asian market as having huge potential for growth. The company has sought partnerships with its counterparts in the region, including making a 10% investment in Ctrip.com International (NASDAQ:CTRP), China's leading player in online travel. So far, Asia hasn't seen nearly the penetration of online services into the overall travel market that the U.S. and Europe have seen, and that leaves more room for Priceline to establish the demand for the market, and then to fill it through its own travel offerings.

Still, one factor that sent both Priceline and Expedia slipping was competition from lodging marketplace Airbnb. Priceline gets a reasonable amount of business from vacation rentals, and so Airbnb poses a threat if it takes away some of that business. Yet hotel chains and other accommodation providers working with Priceline will have an incentive to work together to ensure the continuation of their joint business models, and that should support the entire industry.

In the Priceline report, investors should look to see how the company responds to the recent share-price volatility. Given how well TripAdvisor did in its most recent report, Priceline shareholders are starting to have hope that their company can match those efforts and produce better-than-expected growth. If it does, then the stock has plenty of room to regain its extensive losses in recent months.

Dan Caplinger owns shares of Priceline Group. The Motley Fool owns shares of and recommends Priceline Group and TripAdvisor. The Motley Fool recommends Ctrip.com International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.