Priceline shares soar on strong Q4
Priceline Group's (PCLN) stock soared on Thursday, as the online travel company posted strong end-of-year earnings and growth in areas ranging from mobile bookings to restaurant reservations.
The company's share price was the highest since September, ticking up 8.5% to close at $1,218.05.
"We believe it's based on both a strong quarter and a strong strategy,'' Dan Wasiolek, a Morningstar analyst, said of the travel company's rally.
Priceline Group reported fourth-quarter earnings of $452 million, or $8.56 per diluted share, up from $378 million, or $7.14 per diluted share, in the same period a year ago.
The group said its full-year net income was $2.4 billion, or $45.67 per diluted share, up from $1.9 billion, or $36.11 per diluted share in 2013.
And counting special items, fourth-quarter earnings per share far exceeded last year's, as well as analysts' predictions, at $10.85.
The company's strong showing comes at a time when competition in the online travel agency space is growing more fierce. Last week, Expedia, the largest of the digital booking companies, announced that it planned to acquire Orbitz for roughly $1.6 billion. And The Wall Street Journal is reporting that Priceline intends to buy the hotel room reservation site Rocketmiles for roughly $20 million.
Rocketmiles allows travelers to accrue frequent-flier miles by booking rooms through its site and app.
It would be just the latest acquisition for Priceline, whose buying strategy has differed from Expedia's in that it's moved beyond the travel space and into new markets. For instance, it bought the restaurant reservations portal OpenTable for $2.6 billion in June of 2014. It's also pushed into China, one of the world's largest and most coveted travel markets, through a partnership with that country's biggest online travel agency, Ctrip.com International.
Additionally, Priceline's mobile traffic is strong, at times making up nearly 50% of the site's overall bookings.
"Those three are what we view as very important markets for growth going forward over the next decade,'' says Wasiolek. "I think Priceline remains well positioned for long-term growth within the space.''
Priceline says it isn't rattled by the pending merger of rivals Expedia and Orbitz, or Expedia's earlier purchase of Travelocity.
"I don't see the deal that Expedia's made ... as being a negative for our group,'' said Darren Huston, Priceline's president and CEO in an earnings call with investors Thursday. "If anything, it consolidates, clarifies competition. ... We're just staying focused on things that we do well.''
Still, for the first three months of 2015, Priceline forecast net income per diluted share between $7.20 and $7.75 — a big miss vs. analysts' consensus of $8.52 — due to slower travel bookings and unfavorable currency exchange rates.