After looking at The Priceline Group Inc’s (NASDAQ:PCLN) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Priceline Group
How Did PCLN’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze different companies in a uniform manner using new information. Priceline Group’s latest twelve-month earnings is $3,570M, which, relative to the previous year’s level, has risen by a substantial 81.65%. Given that these figures may be relatively nearsighted, I have determined an annualized five-year figure for PCLN’s net income, which stands at $1,855M. This means that, generally, Priceline Group has been able to steadily improve its profits over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is only owing to an industry uplift, or if Priceline Group has seen some company-specific growth. The ascend in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of costs. Though this has led to a margin contraction, it has made Priceline Group more profitable. Inspecting growth from a sector-level, the US internet and direct marketing retail industry has been growing its average earnings by double-digit 38.51% over the previous year, and a less exciting 6.76% over the past couple of years. This means any uplift the industry is benefiting from, Priceline Group is capable of amplifying this to its advantage.
What does this mean?
Priceline Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Priceline Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Priceline Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PCLN’s future growth? Take a look at our free research report of analyst consensus for PCLN’s outlook.
2. Financial Health: Is PCLN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.