U.S. Markets closed

What Should You Know About Booking Holdings Inc.'s (NASDAQ:BKNG) Growth?

Simply Wall St

On 30 June 2019, Booking Holdings Inc. (NASDAQ:BKNG) released its earnings update. Generally, analyst consensus outlook appear in-line with its track record, as upcoming earnings growth is expected to be 11% next year, similar to the range of average earnings growth for the past five years of 11% per year. With trailing-twelve-month net income at current levels of US$4.0b, we should see this rise to US$4.4b in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Booking Holdings in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Booking Holdings

How is Booking Holdings going to perform in the near future?

The longer term expectations from the 28 analysts of BKNG is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for BKNG, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:BKNG Past and Future Earnings, August 31st 2019

This results in an annual growth rate of 7.6% based on the most recent earnings level of US$4.0b to the final forecast of US$5.2b by 2022. This leads to an EPS of $128.89 in the final year of projections relative to the current EPS of $84.26. This initial high-growth revenue squeezes BKNG's margins. However, analysts are expecting earnings growth to catch up, and current margins of 28% to expand to 28% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Booking Holdings, I've put together three essential aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Booking Holdings worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Booking Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Booking Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.