Is it too late to buy Priceline?
Even in the face of good news, the online travel giant is at resistance.
By Neal Rau, Stock Traders Daily.
Priceline.com's (PCLN) surging international business and new Sponsored Listings are just a few of the drivers that have pushed shares on the online travel giant over the $1,000 mark. Priceline’s shares are up over 56% year-to-date, while the company’s biggest rival Expedia (EXPE) is down 18% year-to-date. Is it too late to buy shares of PCLN?
Priceline beat second quarter numbers as it posted $9.70 a share, while expectations were for $9.36. It also beat on revenues, which were $1.68-billion for the quarter. Priceline said most of the gains came from a bump in hotel bookings and car rentals, which helped revenue leap 38% from a year ago.
Meanwhile, Expedia reported Q2 EPS of $0.64, $0.15 worse than the analyst estimate of $0.79. Revenue for the quarter came in at $1.21 billion versus the consensus estimate of $1.26 billion.
Shares of Priceline are currently trading above $1,000, making it just one of only nine U.S. companies above that level and the only one in the Standard & Poor’s 500-stock index. Shares surpassed the $970 mark achieved on April 30, 1999, prior to the dot.com crash, and before PCLN ended up losing 97% of its value as a result. Today, only five companies in the S&P 500 have fewer shares outstanding, including another momentum stock, Chipotle Mexican Grill,(CMG).
Priceline.com traded in the low $600 dollar range a year ago, but the company has been beating Wall Street expectations, as it continues to see strength out of Europe. According to the Stock Traders Daily real-time trading report, PCLN shares are currently close to testing long-term resistance, and although all the recent news seems good, to investors interested in making money from the stock price is all that matters, and the action from resistance will be key
Priceline reported second-quarter sales last month, which were highlighted by the company’s international growth. International bookings were up 44% year-over-year in the second quarter, accounting for 85% of total bookings for the company. When competitor Expedia reported second-quarter profit and revenue in July that missed analysts’ estimates, the company cited weakness in Southern Europe and reduced traffic from Tripadvisor (TRIP).
Priceline is the leader in global online hotel reservations, and composed of five primary brands Booking.com, priceline.com, Agoda.com, KAYAK and rentalcars.com. The Priceline Group provides online travel services in over 180 countries and territories in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.
Booking.com is the number one online hotel reservation service in the world, offering over 330,000 hotels and accommodations, and is available in 41 languages. European markets continue to surge, as the European market is a fragmented landscape with less chains-hotels, and more hotels that do not have the capability to attract clients to their own websites.
Priceline has improved and simplified its advertising tools with Sponsored Listings, which allow you to highlight your hotel in front of millions of in-market shoppers at the point of purchase and shows participating hotels exactly what it costs to fill each room. Sponsored Listing program is an auction based pay-per-click program designed to drive incremental bookings.
This simple tool allows hotels to bid for prime positioning in destination searches to increase exposure to key customers in hotel search results. Users can use multiple filtering options including demographics, dates, length of stay and advance purchase windows. The system allows users to access real time reporting metrics to adjust bid strategy mid-campaign and actively manage spend by setting daily, weekly or monthly budgets within the platform.
Booking.com accounts for 47% of European online bookings while Expedia only accounts for 21%. Part of the success in Europe is due to Booking.com’s use of the agency model, which works directly with independent hotels as a travel agent, while Expedia works more with the chains as more of a vendor. This model has proved to be more effective, as chains can easily create their own demand and traffic on their own websites.
Recently, Expedia acquired 61.6% equity stake in hotel search website, Trivago, to expand into the European online travel market and gain market share.
Priceline has benefited from the edge it has over competitors in Europe, however the competition will be looking to take a similar approach based on what has worked for Priceline. Shares of Priceline have almost doubled in the last two years, and are up an astonishing 1600% over the last 5 years.
Even if Priceline is able to maintain its edge over competitors, it does not mean the stock will continue to rise, as stock price matters. The stock is trading near yearly highs and it is close to testing long-term resistance. If the stock tests resistance, and remains below resistance, as defined in our real time trading report, Stock Traders Daily expects lower levels and a test of support.
More from Top Stocks
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.