Priceline (PCLN) Soars on Better than Expected Earnings

Shares of Inc. (PCLN: Charts, News) closed up +41.22 or +6.97 percent to $632.76 per share on Tuesday, after the company reported its fourth quarter earnings late Monday. The Norwalk, Connecticut based online reservation and travel company reported substantially higher earnings than were expected in addition to a 51.8 percent rise in gross travel bookings totaling $4.96 billion.'s earnings report, announced the company had non-GAAP net income of $276.8 million or $5.37 per diluted share for the fourth quarter of 2011. Excluding onetime charges, GAAP earnings came to $226 million or $4.41 per share. During the same period last year, Priceline's GAAP earnings came to $135.7 million, or $2.66 per share.

Revenue was also higher, at $990.8 million for 2011's fourth quarter, versus $731.3 million for the fourth quarter of 2010. The analyst consensus for Priceline's fourth quarter earnings was for the company to earn $5.06 per share on revenue of $969 million.

Daily Chart's fourth quarter revenues were 35 percent higher than the previous year's and reflected the increase in the company's online travel bookings. Gross travel bookings through the fourth quarter rose 51.8 percent to $4.96 billion. The company estimated growth of between 33 and 38 percent in gross travel bookings for the first quarter of 2012.

The greater part of's fourth quarter revenue came from its international sales totaling $610 million, an increase of over 62 percent from 2010's fourth quarter. While the firm did not have an outlook for revenue for the first quarter of 2012,'s forecast for GAAP first quarter 2012 earnings was from $3.80 to $3.90 per share, topping analyst estimates of $3.73.

Nevertheless, the company reiterated that, "consistent with prior disclosure, it expected future growth rates to decline quarter to quarter due to the sheer size of the business and that weak economic conditions in Europe have resulted in slowing growth in southern European countries and increasing cancellation rates." President and CEO Jeffery H. Boyd stated that, "The Priceline Group experienced a strong 4th quarter for our travel reservation services." Adding that, "We believe that each of our brands,, Agoda and, gained share in the retail hotel room reservations market, while our Name Your Own Price hotel business in the United States continued to be impacted by increased competition in the discount market.:

Boyd also mentioned improvement in the company's online rental car business,, which was formerly the firm's Traveljigsaw business. " had an outstanding year and we are excited about the global online rental car opportunity." stock reflected the optimism for the company, rising almost seven percent to a ten-year high on Tuesday, and continuing to climb in afterhours trading. traded up another +$1.74 or +0.27 percent to $634.50 per share after the market close.

While some analysts consider the stock to be overvalued, having risen over 1000 percent in the past five years, others find the stock might still be relatively cheap if one takes into account the company's forecast for earnings.

Business in general has been picking up in 2012 and with more economic activity; an increase in travel is almost inevitable. Nevertheless, with recent spiraling fuel prices, travel may become more expensive and perhaps affect's business in the near term.

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Published on Feb 29, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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