The online travel and hotel booking company, Priceline Group (PCLN, Financial), will report its quarterly earnings on May 7 before the bell, and investors are waiting to find out if the group is able to keep its sales chart flying high. In the past quarter, the company had posted a positive surprise of 3.55% and had reported strong top and bottom line figures which clearly surpassed all estimates. Let’s find out what the expectations are from this fiscal year’s first quarterly report card.
The factors under consideration
As customers continue to spend on holidays the sales could be expected to soar higher as international bookings might show a dramatic incline even when there are signs of seasonal weakness in several markets. In the past quarter the sales grew 19% year-over-year, outpacing expectations in the presence of headwinds such as negative currency impact which was highly offset by the bookings growth on an ex-currency basis.
Similar sales growth is also been expected by investors moving forward into the first quarter of the fiscal year 2015. Investors are hopeful that the travel company’s strong market position, firm product line and improved position in emerging markets would drive the results in the first quarter of the fiscal year.
It is to be noted that Priceline has been gradually building a stronger position in emerging international markets, where it is improving on hotel inventories, entering new strategic alliances and making acquisitions that should be the key drivers of revenue in this first quarter and beyond.
The company has projected gross profit to improve 9%-16%, with adjusted EBITDA to be in the range of $475-$510 million. GAAP EPS is forecasted to be around $5.25-$5.80 a share in the quarter.
The analysts weigh in
According to Merrill Lynch analysts, the company should be able to deliver impressive results in its first quarter with international bookings having grown by 25%-26% year-over-year, barring the currency translation effect. The firm has noted that during the quarter the hotel revenue per available room (RevPAR) in the U.S. has risen 6.9% year-over-year, thereby suggesting that travel demand has been on the upward move during the first three months of the year.
Merrill Lynch’s analyst, Justin Post stated – “We believe Expedia’s 1Q bookings and hotel travel data points suggest a solid summer travel season, which should be reflected in Priceline’s 1Q bookings results…”
Most of the Street analysts are holding a bullish opinion on the stock ahead of its earnings announcement. Among the total of 30 analysts covering the stock, 24 have rated it as Buy, 4 recommend a hold and two advocate a sell on the stock.
Final take
There is a lot of optimism for the first quarter earnings of Priceline and since its immediate rival, Expedia (EXPE, Financial) also posted spectacular numbers in its first quarter recently, all eyes are now set on May 7 when Priceline Group would unravel the details of its earnings. Priceline seems to be enjoying the greener pastures as noticed from its past quarters when it posted better numbers than expected, but it’s better to wait for the actual results to be disclosed after which we could provide a better analysis on the quarterly performance of Priceline.
