Inc. stock rises 9.4 percent after huge profit gain in fourth quarter

Priceline's stock rose 9.4 percent after a dramatic increase in profits during its fourth quarter.

by Anjana Sundaram
February 18, 2010

William Shatner’s jingle seems to be working. Inc. stock rose 9.4 percent Thursday after the company more than doubled its profits in the fourth quarter compared to a weak quarter a year ago, handily beating analyst expectations.

The Norwalk, Conn.-based company, which provides discount travel, hotel and rental car bookings, posted a profit of $78.5 million, or $1.55 per diluted share, more than double the $34.1 million, or 75 cents per diluted share, in the same period a year ago. The firm credited its big profit gain to growth in international operations and the global recession, which dragged down results in 2008.

Wall Street’s consensus estimate was for $1.50 per diluted share, according to Zacks Investment Research Inc.

Revenues in the fourth quarter increased by 33.4 percent to $541.8 million, from $406 million in the year-earlier quarter. International operations contributed $222.9 million to total revenues, a 75 percent increase from the year-earlier quarter.

“Worldwide gross travel bookings growth accelerated in the fourth quarter due to strong underlying fundamentals,” said Boyd in a statement.

Analysts were also bullish about the company after its strong earnings announcement.  “In addition to this remarkable revenue growth, Priceline kept its operating costs in check by decreasing offline advertising, sales and marketing expenses,” stated Warren Miller, analyst at Morningstar Inc. in a note.

“We view this strong performance as a clear sign that Priceline is continuing to execute its international growth plan, and we expect the firm’s profitability to continue to increase as a result of the fragmented international supplier industry.”

Looking forward, Priceline projects its first quarter 2010 net income to be between $1.04 and $1.14 per diluted share, compared with 53 cents per diluted share in the year-earlier quarter.  Analysts are estimating earnings per diluted share to be $1.26 for the first quarter and $9.68 for the full year, according to Zacks.

Priceline also expects its year-over-year revenue to increase by 23 percent to 27 percent in the first quarter. Analysts expect its revenues to grow by an average of 22.18 percent in the next quarter.

For the full year, Priceline more than doubled its earnings to $489.5 million, or $9.88 per diluted share, from $182.25 million, or $3.74 per diluted share, in 2008. Revenues increased 24 percent for the full year to $2.34 billion from 1.9 billion a year earlier.

Priceline’s stock closed at $232.95, up $20.08.


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