Priceline.com Inc (PCLN): How Does It Stack Up?

Shares of Priceline.com Inc (NASDAQ:PCLN) hit a new all-time high last week after the company reported strong first quarter results. But should investors chase the stock at these levels?

Yes. Here are three reasons you should consider adding Priceline.com Inc (NASDAQ:PCLN) to your portfolio.

Growth

Priceline.com Inc (NASDAQ:PCLN) is delivering great growth for investors. During the first quarter, the company grew its quarterly top-line revenues 25% year-over-year to $1.3 billion and its bottom-line earnings per share by 25%.

The problem with the U.S. is the market is nearly completely saturated with 60% of travel reservations done online. So Priceline is looking internationally to drive growth.

Europe represents a big growth opportunity for two reasons. First, the market is under penetrated by online travel agencies as only 42% of travel reservations are completed online. Second, the hotel market in Europe is highly fragmented. The U.S. market is dominated by hotel chains that are more likely to offer online bookings through their own websites. In Europe, there’re more independent lodgings, which makes services like Priceline.com Inc (NASDAQ:PCLN) more attractive.

Priceline is well positioned in emerging markets. In 2007, Priceline.com Inc (NASDAQ:PCLN) purchased Bangkok-based Agoda, which gave the company a foothold in Southeast Asia. The company has also bolstered its presence in China through a partnership with Ctrip.com.

Best of breed

How does it stack up to competitors?

Expedia Inc (NASDAQ:EXPE) shares were on fire in 2012 with the stock posting a 95% gain for the year. Investors have been impressed with the company’s efforts to beef up its international presence by purchasing a stake in German-based travel website Trivago for $628 million. The acquisition is expected to give Expedia Inc (NASDAQ:EXPE) exposure to big markets in western and central Europe.

The problem with Expedia Inc (NASDAQ:EXPE) is that it’s still too exposed to the slower growing U.S. market, which accounts for 59% of bookings. The company is growing earnings next year at 18%, and the company is less profitable with a 6.5% operating margin versus 35% for Priceline.

Rival Orbitz Worldwide, Inc. (NYSE:OWW) has posted a monster run with the stock up 100% last year because many analysts left the company for dead. But the last few quarter the company has swung back into profitability posting a $1.34 EPS last quarter. Suddenly people realized the company may have a viable business. But it’s important to remember that Orbitz Worldwide, Inc. (NYSE:OWW) is the third-rate player in the group with the worst numbers.