Priceline.com Inc (PCLN), Expedia Inc (EXPE): This Online Travel Agency Soars Above its Competitors

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Orbitz’s Comeback?

With a market cap of just $1 billion, and a price-to-sales ratio of 1.25, Orbitz Worldwide, Inc. (NYSE:OWW) is significantly smaller and cheaper than Priceline.com Inc (NASDAQ:PCLN) or Expedia Inc (NASDAQ:EXPE). Orbitz has had negative net income in each of the last three years, and has struggled to keep pace with its competitors. A surprisingly strong Q1 2013, in which Orbitz’s quarterly revenue grew by 7% to over $200 million, drove Orbitz stock to triple in value from February 2013 to now. However, it’s still unclear whether Q1 2013 represents a company turnaround, or simply a lucky quarter.

Orbitz Worldwide, Inc. (NYSE:OWW)’s comeback strategy revolves around the growing mobile bookings business. Tablet bookings have grown from next to nothing to close to 10% of the industry in just three years and they already make up 25% of Orbitz’s $225 milllion in annual hotel reservations. Hoping to further capitalize on its burgeoning niche, in February 2013 Orbitz became the first online travel agency to launch an iPad app that allows travelers to book flights, hotels and rental cars through a single app.

Priceline’s Prized Position

Priceline.com Inc (NASDAQ:PCLN)’s industry-leading operating margins and steady position at the head of fast-growing international markets make it the strongest of the U.S. online travel agencies. Though Expedia Inc (NASDAQ:EXPE) and Orbitz Worldwide, Inc. (NYSE:OWW) each have unique and promising plans for growth, neither can match Priceline’s established position in fast-growing markets and consistent profitability. Investors interested in capitalizing on the growth of online travel booking would do well by purchasing stock in Priceline.


Colin Tweel has no position in any stocks mentioned. The Motley Fool recommends Priceline.com. The Motley Fool owns shares of Priceline.com.

The article This Online Travel Agency Soars Above its Competitors originally appeared on Fool.com.

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