Priceline Group (PCLN) Stock | Declining Despite Solid Earnings

Priceline Group Inc (NASDAQ: PCLN)

Priceline Group is having an incredibly hard day in the market today, and for good reason. The company recently reported its earnings, and while earnings came in far ahead of analyst expectations, guidance was not exactly what investors wanted to see. Today, we’ll talk about what we saw from the earnings report, how the market reacted to the news, and what we can expect to see from PCLN moving forward. So, let’s get right to it…

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PCLN Reports Strong Earnings, But Weak Guidance

As mentioned above, Priceline Group is having an incredibly hard day in the market today after reporting its earnings. While earnings and revenue were strong, guidance proved to be a cause for concern. Here’s what we saw from the report:

  • Earnings – In terms of earnings per share, PCLN did incredibly well. During the first quarter, analysts expected that the company would generate earnings in the amount of $9.66 per share. However, the company actually reported earnings $0.88 ahead of expectations, coming in at $10.54 per share.
  • Revenue – Revenue also proved to be an incredibly strong point for PCLN. During the quarter, analysts expected that the company would generate revenue in the amount of $2.12 billion. However, the company actually reported revenue in the amount of $2.15 billion, about $30 million ahead of expectations.
  • Guidance – While revenue and earnings were overwhelmingly positive, there was one area where Priceline Group concerned investors. That area was guidance. The company said that in the second quarter, it is expecting to generate earnings in the range between $11.60 per share and $12.50 per share. While this would represent strong quarter-over-quarter growth, it does represent a relatively large drop from the current consensus estimate of $14.98 per share.

As you can see from the information above, the earnings report released was positive, but guidance is a big of a concern. In a statement, Jeffery H. Boyd, Chairman and Interim CEO at PCLN, had the following to offer with regard to the quarter’s performance:

The Priceline Group delivered strong top line growth and attractive margins in the first quarter… Growth in room night reservations of 31% reflects continued solid execution in the market for global travel… The Group is looking forward to continued investments in product, service and branding that will drive long-term growth for our leading brands.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. With PCLN beating expectations with regard to both revenue and earnings, at first glance the earnings report was overwhelmingly positive. However, with the poor guidance in mind, investors are taking the news as negative overall. As a result, we’re seeing declines in the value of the stock today. Currently (9:48), PCLN is trading at $1,235.45 per share after a loss of $119.19 per share or 8.80% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from the Priceline Group. In the short term, we’re likely to see further declines as concerns over guidance remain. However, in the long run, I have a bullish opinion of what we can expect to see. PCLN has done an incredible job with branding, product management, and sales and, in the long run, I don’t expect this to change.

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What Do You Think?

Where do you think PCLN is headed moving forward and why? Let us know your opinion in the comments below!

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