Priceline Group Inc Beats Earnings Estimates, Stock Jumps

Priceline Group Inc Beats Earnings Estimates, Stock Jumps

The largest online booking service, Priceline, reported fourth quarter earnings today above analysts’ predictions. Analysts were looking for earnings per share of $10.10 on revenue of $1.8 billion. Priceline Group reported actual fourth quarter earnings of $10.85 earnings per share on revenue of $1.84 billion.  However, management sees lower earnings for first quarter 2015 than analysts were anticipating. Management estimates earnings for first quarter 2015 to range between $7.20 and $7.75 per share, while analysts were estimating $8.46 earnings per share.  Despite the lower first quarter guidance, Priceline shareholders are cheering as the stock rallies 8% in early trading Thursday.

Strong hotel and car rental sales aid earnings

The President and CEO of Priceline Group, Darren Huston, told investors during the earnings conference call that international gross bookings saw a growth of 27% and  full year nightly reservations of 346 million showed a year over year growth of 28%.  The strong growth figures came in spite of the unfavorable currency exchange rates that continue to plague corporate America.  Priceline CFO, Daniel Finnegan told investors that “extreme volatility in foreign exchange rates significantly affects our operating results” and will bring “significantly fewer dollars” in revenue.

CEO Huston told investors that the company plans to continue investing in its other brands, OpenTable and Booking Suite, as the company sees these entities as an important source of profits over the long term.  Additionally, Huston said that the Expedia-Orbitz deal was good due to the fact that it “consolidates and clarifies competition”.

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Management announces $3 billion in buybacks

Aside from the mostly bullish earnings call, management said they will be enacting a $3 billion buyback program, as a sign of continued confidence in the long term success of Priceline.  Despite the fact that continued strong US dollar could continue to bring in “significantly fewer dollars”, as the CFO put it, management is trying to basically tell investors that all is well and that Priceline is doing well.  With Travel bookings rising 17% year over year, 23% if you keep a constant currency basis, Priceline is doing well and growth is still alive and well.

Overall, despite foreign exchange shaving some earnings off the top, Priceline still managed to impress and, most importantly, beat analysts’ estimates.  First quarter guidance may be on the more cautious side, but full year 2015 results will most likely continue to impress and show solid organic growth.

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