Priceline.com will release its quarterly report on Thursday, and with the stock having soared 50% so far this year, shareholders are looking for any excuse to allow the stock to hit the $1,000 level for the first time. But despite the unquestionable momentum the stock has, Priceline earnings would probably have to grow at an even more rapid pace than in the past to send the stock higher.
Priceline has simply dominated the travel portal business, with its innovative business model and its early emphasis on creating an international network of travel offerings having paid off with performance that has crushed its competition. In the process, the stock has overcome recessions and sluggish economic conditions in various parts of the world. Let's take an early look at what's been happening with priceline.com over the past quarter and what we're likely to see in its quarterly report.
Stats on priceline.com
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Can Priceline earnings beat by enough to send the stock soaring?
Surprisingly, analysts have had mixed views on Priceline earnings in recent months, cutting their June-quarter estimates by $0.20 per share but adding almost double that amount to their full-year 2013 projections. The stock has continued its massive run, rising almost 30% just since early May.
Priceline has had two big pieces of news during the quarter: its soaring stock price and the completion of its merger with Kayak. On the merger front, the Kayak acquisition should add to revenue even as Priceline plans to have the Kayak brand remain independent within the combined corporate entity. At the same time, the information that Priceline gathers from Kayak could widen its already substantial competitive advantages against Expedia and Orbitz , especially as Priceline gets more savvy about adding the aggregator website's information to its own impressive database.
Priceline hasn't hesitated to take advantage of its own high stock price. In May, the company announced a deal to raise almost $1 billion by issuing seven-year convertible notes. The notes will cost Priceline only 0.35% annually in interest expense and will be convertible into common stock at a price of $1,315, or about 66% above the nearly $800 per share price at which the stock traded when Priceline priced its notes. Essentially, the deal gave Priceline a nearly costless method of repurchasing its own stock while creating the potential for a big profit if the shares continue to rise.
Meanwhile, conditions in the travel industry have been strong, supporting Priceline's growth. Travel-review and advisory service TripAdvisor issued an optimistic survey about the volume of U.S. travel during the summer months, with a big boost in the number of planned vacations over last year's figures. Such gains could help Priceline even more than TripAdvisor, as the travel portal could benefit from strength domestically.
In the Priceline earnings report, watch to see whether it's the international or the domestic side of the business that provides a greater amount of the company's growth. As economic conditions change worldwide, Priceline needs to demonstrate its ability to adapt with them if it wants to climb to $1,000 per share and beyond.
Priceline is a great example of a stock that doesn't just creep upward at a glacial pace. Get more stocks like Priceline by following Motley Fool co-founder David Gardner, founder of the world's No. 1 growth-stock newsletter, and his unique strategy for uncovering truly wealth-changing stock picks. Our special 100% free report called "6 Picks for Ultimate Growth" will help give you access to a whole new game plan of stock picks to help power your portfolio. Click here and get started today.
Click here to add Priceline.com to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Will Priceline Earnings Send the Stock Over $1,000? originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of priceline.com and TripAdvisor. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.