Priceline.com (NASDAQ: PCLN) is
an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors last week, when it reported Q1 EPS of 76 cents and revenues of $403.20 million. Analysts had been expecting 60 cents and $377.17 million. Gross travel bookings increased 76% yr/yr, a result above company guidance of 60-65%. Pro forma gross profit rose 74.7% yr/yr, versus guidance of 55-60%. Management predicted FY08 EPS of $5.25-$5.65 ($5.12 consensus).
The stock
price popped on the news and has since been consolidating the gain in a bullish "pennant" pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with three "strong buys", four "buys" and seven "holds". Analysts expect a 26% growth rate, through the next year. The PCLN Sales Growth rate (33.78%), EPS Growth rate (130.30%), Return on Assets (15.06%), Return on Investment (23.41%), Return on Equity (39.43%), Revenue per Employee ($1.14M) and Net Income per Employee ($147.56k) compare favorably with industry, sector and S&P 500 averages. Over the past 52 weeks, the stock has traded between $53.80 and $144.34. A stop-loss of $119.75 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.
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