The Priceline Group Inc. PCLN is slated to report third-quarter 2017 earnings on Nov 6 after the bell. We expect the company to perform well this quarter driven by strength in its agency and merchant models.
We observe that shares of Priceline have gained 30.5% year to date, underperforming the industry’s 59.9% rally.
Strong Agency Revenues to Drive International Results
Priceline generates the bulk of its revenues from international markets where the agency model is more popular. This is reflected in the merchant/agency split of revenues, which was 16/77% in the second quarter.
We expect agency revenues to grow both sequentially and year-over-year in the to-be-reported quarter, driven by strength across priceline.com and booking.com. While priceline.com is expected to benefit from room night growth, booking.com is likely to ride on vacation rental properties growth.
The Zacks Consensus Estimate for agency revenues is pegged at $3.5 billion. In the second quarter, agency revenues had increased 30.6% sequentially and 25.9% year over year.
Agoda and Rentalcars to Boost Merchant Revenues
In the to-be-reported-quarter, merchant revenues are also expected to grow both sequentially and year over year, driven by strength across agoda.com and rentalcars.com. While agoda.com is likely to benefit from discounting in markets, rentalcars.com is expected to ride on continuous operational improvements.
The Zacks Consensus Estimate for agency revenues is pegged at $621 million. In the second quarter, merchant revenues were up 12.7% sequentially and 3.8% year over year.
The Priceline Group Inc. Revenue (TTM)
What Our Model Suggests
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
Priceline has a Zacks Rank #3 and an Earnings ESP of +0.13%. This combination indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
What’s in Favor of Priceline?
The U.S. Commerce Department estimates international travel to the United States to witness CAGR of 3.3% from 2016 to 2021. Inbound travel volumes from Mexico, China, Canada, India and South Korea will be the highest during this period. Visitor volume in 2017 is expected to be up 2.4% from 2016. Since it is a major international player, these trends play into Priceline’s sweet spot and will have an impact on its quarterly performance.
Other Stocks to Consider
Here are some stocks that you may also want to consider as our model shows these have the right combination of elements to deliver a positive earnings surprise:
NVIDIA Corp. NVDA, with an Earnings ESP of +0.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Instruments Incorporated TXN, with an Earnings ESP of +0.42% and Zacks Rank #1.
Extreme Networks, Inc., EXTR with an Earnings ESP of +9.75% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment