Is Priceline.com Inc (PCLN) A Good Stock To Buy?

We can also compare Priceline to American Express Company (NYSE:AXP), whose businesses include a travel management unit, and to Chinese travel services company Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP). American Express has been experiencing only modest growth, going by recent reports, and while its trailing P/E is considerably lower than what we see at Priceline or Orbitz- at 19- that does seem high considering the company’s recent performance. As a result we’d avoid the stock. Ctrip has risen over 90% in the last year, which combined with a decline in the business’s earnings has resulted in quite high P/E multiples. In fact, Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) is valued at a premium to all the other stocks we’ve discussed at a forward earnings multiple of 32. The company’s revenue has been up, but we’d still be concerned about that valuation.

With Orbitz not seeming that attractive as well, and with Expedia’s recent performance being weak, we would say that relatively Priceline does look like the best option in the industry. The question is if the stock is just too expensive in absolute terms. It seems to us that Priceline’s progress in making inroads into the key U.S. market is the most critical issue here, and so we’d recommend following further developments in that area and potentially doing more research on the company if it appears to be achieving success.

Disclosure: I own no shares of any stocks mentioned in this article.