Tags: Priceline.com | Priceline | booming | PCLN

Priceline.com Booming On International Travel

By    |   Thursday, 17 May 2012 03:46 PM

Priceline.com (PCLN) is booming in the online booking space, partly because of international business growth and partly on a general shift in the market toward using the Internet first to book travel plans. Analysts expect these trends to continue in the company’s favor.

Priceline.com is an online travel company that offers customers hotel room reservations at more than 210,000 hotels worldwide through the Booking.com, Priceline.com and Agoda brands and in the United States offering car rentals, airline tickets, vacation packages, destination services and cruises through Priceline.com. Worldwide, it offers car rental reservations through RentalCars.com.

“Our business is driven primarily by international results. During the year ended Dec. 31, 2011, our international business (the significant majority of which is generated by Booking.com) represented approximately 78 percent of our gross bookings...and approximately 88 percent of our consolidated operating income,” management told investors in a recent filing.

“Given that the business of our international operations is primarily comprised of hotel reservation services, gross profit earned in connection with the reservation of hotel room nights represents a substantial majority of our gross profit.”

The online travel category has continued to experience significant worldwide growth as consumer purchasing shifts from traditional offline channels to interactive online channels, the company explains. Priceline is the global leader in online hotel reservation market based on room nights booked, management said.

“Our strategy is to continue to participate broadly in online travel growth by expanding our service offerings and markets,” they said.

Priceline.com has a market cap of $32.97 billion in a sector, internet and catalog retail, where the average company size is $2.61 billion. Its trailing 12-month P/E ratio is 29.91 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.38, compared to 4.26 for the sector.

Its projected earnings per share growth for the coming year is 24.61 percent, compared to a sector average of 144.25 percent.

Driving upside

Wall Street is positive on Priceline, with buy or outperform ratings in from Raymond James, RBC Capital Markets, Credit Suisse, Piper Jaffray, Morgan Stanley, Deutsche Bank, Morgan Keegan & Co., Jefferies, Citigroup, Stifel Nicolaus, Goldman Sachs and Zacks Investment Research.

“The secular growth trend in the online travel space, Priceline’s own business momentum, international growth opportunities, good execution, prudent marketing strategy and strong financial position are likely to drive upside to the shares,” wrote analysts from Zacks in a recent report.

Priceline.com next reports on July 25.

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