The Priceline Group Inc. ($PCLN) is the well-known leader in online travel services owning "six primary brands: Booking.com, priceline.com, agoda.com, KAYAK , rentalcars.com and OpenTable. " Not only do the operate in over 220 countries and territories, but they also operate in over 42 languages, a key skill in the globalized economy. Now let us examine the financial data driving this travel service group and determine whether they are primed for an investment.
According to Priceline's Investor Relations webpage they handled $55.5 billion in gross bookings in 2015. A few data points that I like about PCLN are as follows...
P/E Ratio: 25.60
This ratio is higher than the average for the S&P 500, but PCLN has been growing rapidly and has outpaced their competition in numerous categories.
Profitability
PCLN tops the industry average in gross profit margins (90.2% vs 77.1%), operating margin (35.3% vs. 20.2%) and profit margin (27.7% vs. 19.4%)
Financial Strength
PCLN has less debt/equity than the industry average and is a better value in terms of Price/Cash flow.
Revenue
PCLN's revenue per share is 179x vs the 20.7x industry average.
Summary
This company is truly the best of breed when it comes online travel booking. They bring in a tremendous amount of revenue without taking on insurmountable debt. This company also knows how to capitalize on this revenue and turn it into profit. I would certainly look into investing in a piece of this company as the U.S. economy continues to improve and consumers will travel more frequently.
Wednesday, May 11, 2016
Tuesday, May 10, 2016
Just a bit of FitBit (FIT)
It has been quite a while since I last posted, but I am back! I will fill in the blank spaces in future posts, but I am excited to announce my most recent investment. I invested in FitBit Inc. ($FIT) after its precipitous 18% drop after reporting earnings. FitBit was an IPO darling just a year ago, but it has fallen from nearly $50 to $14. This story is all about expectations...simply, FitBit is actually much better off now then when they first became a public company. They have not met Wall Street's lofty expectations however, so their stock has been punished. This is a company with competition, but they have serious growth potential and are the dominant name in the wearables market. At a P/E multiple that fell to 18 I could not help but invest.
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