Priceline comes down to reality


The stock has come 20% from its high.

Now that Priceline (PCLN) shares are closer to $1,000 its got me interested.  

Expedia (EXPE) took a hit this week after disappointing the street, that's fine, all I care about is Priceline. If you are thinking about investing in the online travel space, there is no better company than Priceline. 

When you compare EXPE to PCLN the 5 year trend tells the tale of who is the stronger player. It's Priceline by more than double. In the past five years shares of Expedia have gained 289% while Priceline marched 419%. Everyone thought they could short PCLN as the stock price continued to climb to $1,000. That has not been the case until recently. In the past 6 months both companies have fallen from grace but PCLN has been hit even harder, losing 20% while EXPE shed 7%. Only who cares about comparing these two companies... no one.

All that matters is at this point, and before the earnings call -- could Priceline be worth a bet?

Ticker Price 52 Wk-High 52 Wk-Low P/E EPS From 52wk High From 52wk Low
PCLN $1,022.42 $1,378.96 $990.69 23.08 44.30 -34.87% 3.82%
  • Priceline is scheduled to report its Q4 2014 results on Feb 19th before market hours.
  • Analysts estimate the company will report Non-GAAP EPS of $10.01 on revenue of $1.8 billion.
  • Priceline’s huge and rapidly growing international bookings share will face headwinds from the appreciating dollar, negatively impacting revenues and earnings to that extent.
Priceline makes the majority of its money from international bookings. Via on Nov 4th:

Bookings, or the total value of services purchased by Priceline customers, will probably increase by 8 percent to 15 percent in the fourth quarter, slowing from a 28 percent increase in the third quarter, the company said. Priceline, which gets the bulk of its revenue from international travelers, also cited the strength of the U.S. currency.

“Going into the fourth quarter, we try to be more prudent because most of our money is in overseas,” Chief Executive Officer Darren Huston said in an interview. “The effect of exchange rates and macroeconomical headwinds is something that we can’t control.”

Uh oh. They just said it. That same song and dance complaint that other big companies with international exposure have said this earnings season -- foreign currenices hurt our business, wah, wah, wah!!!!

MASTERY Bottom Line (Street Fighter Style)

Mastery thinks Priceline could fall into the strong U.S. dollar and weak non U.S. currencies excuse.  What is good is that the Street has lowered expecations for Priceline thanks to Expedia's crap call last week. At any rate for those who have not placed a bet on Priceline -- wait.

Priceline is the best company in their sector. Mastery would love to get a chance to pick-up PCLN on an earnings miss.