Priceline Group, Inc. (PCLN - $1,760)(NASDAQ:PCLN)
During the quarter, we established a position in Priceline, a pioneer and global leader in the online travel industry. We believe Priceline’s valuation is attractive when viewed against our long-term growth expectations, as we expect online bookings to continue capturing share from offline sources for years to come. The company is investing heavily in business travel, mobile, alternative accommodations and other ancillary businesses, which we believe will further solidify its competitive position and support attractive long-term growth. Priceline’s strong brands, significant investment expenditure and scale advantages should further enhance the company’s powerful network effect. In addition, its geographic exposure, revenue mix and superior online traffic conversion make it one of the best operating models in the industry. On our one-year forward estimate, Priceline trades in line with the S&P 500 P/E ratio (excluding its net cash and investments), despite having a superior growth outlook, an above-average margin profile and extremely high returns on incremental capital, allowing us to buy an above-average business at just an average price.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund fourth quarter 2017 commentary.
