The Priceline Group, Inc. – Value Analysis (NASDAQ:PCLN) : October 6, 2017

Capitalcube gives The Priceline Group, Inc. a score of 75.

Our analysis is based on comparing The Priceline Group, Inc. with the following peers – TripAdvisor, Inc., Expedia, Inc., ILG, Inc., Ctrip.com International Ltd Sponsored ADR, MakeMyTrip Ltd., IAC/InterActiveCorp. and Viad Corp (TRIP-US, EXPE-US, ILG-US, CTRP-US, MMYT-US, IAC-US and VVI-US).

Investment Outlook

The Priceline Group, Inc. has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It currently trades at a Price/Book ratio of (8.08).
  • PCLN-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • PCLN-US has relatively high profit margins while operating with median asset turns.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • PCLN-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • PCLN-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • PCLN-US has the financial and operating capacity to borrow quickly.

Access our research and ratings on The Priceline Group, Inc.

Leverage & Liquidity

PCLN-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 9.03% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 16.04%), and a well-cushioned interest coverage level of 17.65x, PCLN-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 7 peers for the company have an outstanding debt balance.

PCLN-US has maintained its Quick & Able profile from the recent year-end.

  • PCLN-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 34.98x in 2014.
  • While its interest coverage decreased to 17.65x from 18.50x (in 2016), its peer median increased during this period to 7.15x from 6.06x.
  • Interest coverage fell 1.94 points relative to peers.
  • PCLN-US‘s debt-EV has declined 0.53 percentage points from last year’s high but remains above its five-year average debt-EV of 6.83.
  • The decrease in its debt-EV to 9.03% from 9.56% (in 2016) was also accompanied by a decrease in its peer median during this period to 16.04% from 18.92%.
  • Relative to peers, debt-EV rose 2.35 percentage points.

Access the detailed analysis for The Priceline Group, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
TripAdvisor, Inc. 5.73 1.9 12.5 121.49
Expedia, Inc. 13.65 0.69 3.89 42.62
ILG, Inc. 23.98 1.58 10.41 32.52
Ctrip.com International Ltd Sponsored ADR 27.13 1.58 1.63 5.09
MakeMyTrip Ltd. 0.03 3.67 -7.84 -13140.41
IAC/InterActiveCorp. 18.42 2.94 3.04 26.4
Viad Corp 20.55 0.62 13.37 60.34
Priceline Group Inc 9.03 2.2 17.65 47.03
Peer Median 16.04 1.74 7.15 37.57
Best In Class 0.03 3.67 17.65 121.49

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Company Profile

The Priceline Group, Inc. is an online travel company, which provides travel and related services. It offers accommodation reservations including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties. The company provide services through Booking.com, priceline.com, agoda.com, KAYAK, rentalcars.com and OpenTable brands. It also allows consumers to easily compare airline ticket, hotel reservation and rental car reservation information from hundreds of travel websites at once through KAYAK. The company was founded by Jay Scott Walker on July 18, 1997 and is headquartered in Norwalk, CT.

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