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It has been about a month since the last earnings report for Booking Holdings (BKNG). Shares have lost about 0.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Booking Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Booking Holdings Report Loss in Q4
Booking Holdings reported a non-GAAP loss of 57 cents per share for fourth-quarter 2020, which was narrower than the Zacks Consensus Estimate for a loss of $5.08 per share. Further, the figure compares unfavorably with the earnings per share of $23.30 and $12.27 in the year-ago quarter and the previous quarter, respectively.
Revenues of $1.24 billion surpassed the Zacks Consensus Estimate of $1.17 billion. However, the top line declined 63% year over year on both reported and constant currency basis. Also, the figure plunged 53.1% sequentially.
The coronavirus pandemic continued to remain the biggest headwind during the reported quarter. Increasing number of COVID-19 cases worldwide, resulting in travel restrictions and shutdown of several travel markets, hurt the performance of the company in the fourth quarter.
We note that Booking Holdings witnessed a year-over-year decline of 52.2% in the rental car in the reported quarter.
Additionally, the company witnessed sluggish agency, merchant, and advertising and other business revenues in the reported quarter.
Nevertheless, it witnessed a year-over-year improvement of 4% in the airline tickets unit region in the reported quarter.
Notably, the booked room nights number, which was 76 million in the fourth quarter, plunged 60.4% from the prior-year quarter.
The current pandemic remains a major headwind for the travel industry in the near term.
Nevertheless, the company’s highly variable cost structure and strong liquidity position are expected to help it navigate the crisis scenario. Moreover, its solid cost-cutting initiatives are added positives.
Top Line in Detail
Booking Holdings generates the bulk of revenues from international markets, wherein the agency model is more popular. This is reflected in the merchant/agency split of revenues, which were30.4/65.4% in the fourth quarter (the previous quarter’s split was 31.7/65.3%)
Merchant revenues were $376 million, down 60.6% year over year.Further, Agency revenues were $810 million, down 61.9% on a year-over-year basis.
Advertising & Other revenues were $52million (4.2% of total revenues), decreasing 79.8% from the year-ago quarter. These are non-inter company revenues from Kayak and Open Table.
Booking Holdings’ overall gross bookings totaled$7.3 billion, down 64.7% year over year on a reported basis. Further, the figure was down 65% inconstant currency from the year-ago quarter.
Nevertheless, total gross bookings surpassed the Zacks Consensus Estimate of $6.8 billion.
Merchant bookings were $2.2 billion, down 65.9% from the prior-year quarter. Further, agency bookings plunged 64.1% year over year to $5.1 billion.
Adjusted EBITDA in the fourth quarter was a loss of $38 million compared to a gain of $1.3 billionin the prior-year quarter.
Per management, operating expenses were $1.4 billion, down 35.8% on a year-over-year basis. As a percentage of revenues, the same expanded significantly to 112.4% in the reported quarter from 64.9% in the previous-year quarter.
Consequently, the company generated an operating loss of $153 million compared with the operating income of$1.2 billion in the year-ago period.
As of Dec 31, 2020, cash and cash equivalents were$10.6 billion, down from $11.2 billion as of Sep 30, 2020.
Further, short-term investments amounted to $501 million in the reported quarter, which remained nil in the previous quarter.
At the end of the fourthquarter, Booking Holdings had $11.03 billion of long-term debt, up from $10.8 billion at the end of the third quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -94.89% due to these changes.
At this time, Booking Holdings has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Booking Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.