Priceline.com Inc (PCLN): The Best of the Best

Priceline.com Inc (NASDAQ:PCLN)‘s stock continues to challenge bearish views and stay close to the $800 level. Many pessimistic investors have repeatedly asked why or how this company has continuously reached new highs. The answer lies within the question; it’s because Priceline has become the number-one vacation provider for traveling.
Priceline.com Inc (NASDAQ:PCLN)
Priceline.com Inc (NASDAQ:PCLN) has tons of potential to grow because it does about 70% of its revenue abroad. Fundamentally, Priceline has never looked better with a P/E of 28 and a 34% operating margin; Priceline also has about $103 per share in cash. Another factor to consider is the fact that it has beaten earnings estimates for 12 straight quarters.
International affairs
Priceline.com Inc (NASDAQ:PCLN) dictates the international online-travel marketplace with its booking.com and agoda.com brands. Many investors were worried that the European and Greek-specific crises would affect Priceline’s earnings, but that didn’t happened. Bookings in Europe have been rather consistent, and considering that only 25% of the European hotel market is online, there’s plenty of room for growth. Priceline has less than 10% of its total hotel bookings in Europe. There’s considerable room for growth in Europe. There is also considerable potential in Asia, the Middle East, and Africa.
Priceline.com Inc (NASDAQ:PCLN) is looking to build up its existence in the U.S. market. Priceline is planning on rolling out an advertising blitz to increase the presence of its booking.com brand in the U.S. This would lower margins to some extent in the next few quarters, but will increase the site’s presence in the large U.S. market and deliver phenomenal growth down the road.
Competitors
Analogous to Priceline, Expedia Inc (NASDAQ:EXPE) has had a phenomenal start for 2013. Expedia is taking a smart strategic route to continue its growth. Expedia still dominates most of the U.S travel market as it has a 43% market share compared to Priceline’s 11%.
Priceline.com Inc (NASDAQ:PCLN)’s competitors have also started to penetrate its margins. Currently, Priceline has margins of approximately 34%. Analogous to Priceline, Expedia also has a horde of cash on its balance sheet; currently more than $2 billion.
Expedia Inc (NASDAQ:EXPE) has had its losses. It reported a loss of $0.24 on April 25. Because of these results, analysts have decided to tremendously lower estimates; one notable analyst firm is Zacks, going from $3.03/share to $2.58/share
Orbitz Worldwide, Inc. (NYSE:OWW is also having a phenomenal start for 2013 with accelerating growth. These companies continue to invest in three key areas: mobile, loyalty, and international markets. Orbitz rolled out its Orbitz.com Rewards Loyalty program in the first quarter and enhanced its HotelClub initiative with expanded support for more currencies and foreign languages to allow it to expand further into the international market.
Orbitz Worldwide, Inc. (NYSE:OWW) has a relatively high valuation, currently trading at 26 times forward earnings. This is more than both Priceline.com Inc (NASDAQ:PCLN) and Expedia. Orbitz has also proved to be the weakest company of the three because it has gone back and forth between making and losing money. Both Priceline and Expedia have been firmly profitable.
I would not, however, bet against Orbitz or sell it short because I think the company is a possible takeover target. The travel industry has seen many takeovers over the past few years and frankly I would not be surprised to see Orbitz taken over at some point.
Future

Amongst its competitors, Priceline.com Inc (NASDAQ:PCLN) has the largest market cap, fastest quarterly revenue growth, highest operating margins, highest profits, and the lowest P/E. Priceline is making the right moves for the long run. The company already dominates the international travel market and that is where the fastest growth is occurring. Currently, Priceline has more than $5 billion, or $103.51 per share, in cash.
Priceline has not commented on what it plans on doing with this cash but it is a very good future catalyst. Despite Priceline’s rally over the past few years, there are multiple reasons as to why Priceline can continue to run. Valuation, high short interest, and potential use of cash are all reasons why Priceline can continue to rally.

The article Priceline: The Best of the Best originally appeared on Fool.com and is written by Shazir Mucklai.

Shazir Mucklai has no position in any stocks mentioned. The Motley Fool recommends Priceline.com. The Motley Fool owns shares of Priceline.com. Shazir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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