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Headlines
- Booking Holdings Q2 revenue and earnings are expected to match market predictions.
- The stock has risen 5% year-to-date, with a mixed performance history.
- Management anticipates moderate growth in room nights, bookings, and revenues for Q2.
Booking Holdings (NASDAQ:BKNG), the world’s largest online travel agency offering services from lodging to airline tickets to car rentals, is set to announce its fiscal second-quarter results on Thursday, August 1. We predict the company’s stock to likely remain steady, with revenues and earnings aligning with market expectations. The stock has increased by 5% this year to $3721. In contrast, Expedia (NASDAQ:EXPE) stock has dropped 15% year-to-date to $129.
In the first quarter, Booking Holdings exceeded expectations across every operational metric, including revenues and profitability. These results were driven by a longer booking window, resilience in Europe, and minimal negative impact from the Middle East conflict. Consumer optimism due to low unemployment rates and anticipated Fed rate cuts are positive factors, though concerns about layoffs at major companies remain.
For the second quarter, BKNG management anticipates room night growth of 4%-6%, impacted negatively by conditions in Israel and the absence of a booking window benefit. April’s performance was notably above 6%. Gross bookings are projected to rise between 3%-5%, with revenue growth expected at 4%-6%. The company forecasts Q2 EBITDA to be between $1.7 billion and $1.75 billion, slightly down due to a shift in Easter timing. Additionally, BKNG expects its fixed costs to grow at a slower rate than revenues through 2025 and beyond, as the company invests in AI technology.
BKNG stock has experienced significant gains of 70%, rising from $2215 in early January 2021 to approximately $3721 currently, compared to a 45% increase in the S&P 500 over the same period. However, this growth has been inconsistent, with returns of 8% in 2021, -16% in 2022, and 76% in 2023. Meanwhile, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023, indicating BKNG underperformed the S&P in 2021.
Consistently outperforming the S&P 500 has been challenging for individual stocks, including heavyweights in the Consumer Discretionary sector such as AMZN(NASDAQ:AMZN), TSLA, and HD, and even for mega-cap stars like GOOG, MSFT, and AAPL. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has outperformed the S&P 500 each year over the same period. This is attributed to HQ Portfolio stocks providing better returns with less risk, offering a smoother performance trajectory.
Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, BKNG might face similar challenges as in 2021 and potentially underperform the S&P over the next 12 months, or it could see a robust rise.
Revenue Projections:
Trefis estimates Booking Holdings’ Q2 2024 revenues to be approximately $5.8 billion, matching the consensus estimate. In Q1 2024, the company’s revenues grew 17% year-over-year to $4.4 billion, driven by a 10% increase in gross bookings to $43.5 billion. Room nights booked increased by 8%, rental car days by 11%, and airline tickets by 33% year-over-year in Q1. For the full year 2024, we expect revenues to grow by 9% to $23.3 billion.
Earnings Per Share (EPS) Outlook:
Booking Holdings’ Q2 2024 EPS is projected to be $38.21, aligning with the consensus estimate. The company’s operating profit in Q1 was $791 million, up 75% year-over-year, reflecting a 600 basis points improvement in operating margin. This was achieved through more efficient marketing and operational leverage on personnel and G&A, despite higher sales and R&D expenses, resulting in an EPS of $22.40, nearly triple compared to the same quarter last year.
Stock Price Estimate:
According to our valuation, with an EPS estimate of around $176.45 and a P/E multiple of 22.1x in fiscal 2024, this translates to a stock price of $3900, in line with the current market price.
For a broader comparison, BKNG Peers provides insights on how Booking Holdings stock measures up against its peers on crucial metrics. Additional useful comparisons for companies across various industries can be found at Peer Comparisons.
