What is Behind the Outperformance of Priceline’s Stock?
Since the beginning of 2016, Priceline’s stock have risen more than 60 times and continues to outperform Nasdaq and SP500. In the last 5 years, PCLN gained +209.72% which is an outperformance compared to Nasdaq Composite’s +127.37% gain.
P/E ratio of the stock is almost 50% higher than Nasdaq’s P/E.
Company’s growth in revenue and net income is very impressive:
Priceline’s high profit margins indicate very wide economic moat. But the company spends a lot of money for SG&A (Selling, General and Administrative Expenses), 57% of revenue.
As numbers show, Priceline operates very profitable business with wide economic moat and the company spends the most of the generated profit to aggressively grow its business.
The company has already well established brands: booking.com, priceline.com, rentalcars.com, kayak, agoda, opentable. Globally, travel bookings and reservations are made more and more online, especially via mobile. Because of its brands, Priceline benefits most from the shift to online.
Priceline’s growing customer base feeds also company’s network effect with hotel operators, airlines, and car rental companies which would prefer larger platforms to access more customers.
No Investment or Financial Advice.