Priceline May Boost Investors' Portfolio

Priceline Group Inc. (PCLN, Financial) is an online travel company that offers its customers hotel room reservations at over 295,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, the company also offers its customers reservations for car rentals, airline tickets, vacation packages, destination services and cruises through the priceline.com brand. It offers car rental reservations worldwide through rentalcars.com. The Priceline Group provides online travel services in over 200 countries and territories in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.

Tourism is a trillion-dollar industry, and Priceline.com Incorporated rules this space. Priceline's stock had a stunning performance over the last five years. It has been very successful in capturing the huge business opportunities presented by e-commerce in the last decade.

Fourth quarter results

Fourth quarter gross travel bookings were $10.7 billion, an increase of 17% over a year ago (approximately 23% on a local currency basis). The group's gross profit for the fourth quarter was $1.7 billion, a 26% increase from the prior year. International operations contributed gross profit in the fourth quarter of $1.43 billion, a 24% increase versus a year ago (approximately 32% on a local currency basis). The Group had GAAP net income applicable to common shareholders for the fourth quarter of $452 million, or $8.56 per diluted share, which compares to $378 million or $7.14 per diluted share, in the same period a year ago. Non-GAAP net income in the fourth quarter was $577 million, a 22% increase versus the prior year. Non-GAAP net income was $10.85 per diluted share, compared to $8.85 per diluted share a year ago. FactSet consensus for the fourth quarter 2014 was $10.10 per diluted share. Adjusted EBITDA for the fourth quarter 2014 was $712 million, an increase of 23% over a year ago. The section below entitled "Non GAAP Financial Measures" provides definitions and information about the use of non-GAAP financial measures in this press release, and the attached financial and statistical supplement reconciles non-GAAP financial information with the group's financial results under GAAP. For the full-year 2014, the group had gross travel bookings of $50.3 billion, a 28% increase compared to 2013 (approximately 30% on a local currency basis). Gross profit for the Group in 2014 was $7.6 billion, a 33% increase from the prior year. International operations contributed full-year gross profit of $6.64 billion, a 32% increase versus the prior year (approximately 34% on a local currency basis). The group had GAAP net income for full-year 2014 of $2.4 billion, or $45.67 per diluted share, which compares to $1.9 billion or $36.11 per diluted share in 2013. Non-GAAPnet income for 2014 was $2.8 billion, a 29% increase versus the prior year. Non-GAAP net income was $53.31 per diluted share, compared to $41.72 per diluted share a year ago. Adjusted EBITDA for 2014 was $3.5 billion, an increase of 29% over a year ago. “The Priceline Group finished 2014 with a strong fourth quarter, reporting solid hotel and rental car unit growth,” said Darren Huston, president and CEO of The Priceline Group. “International gross bookings growth of 27% on a local currency basis in the fourth quarter demonstrates the resilience of the business, despite an environment of economic uncertainty and foreign exchange volatility. The group’s full year room night reservations of 346 million grew by 28%, leading to gross bookings for the group of just over $50 billion.” Looking forward, Mr. Huston said, “The group’s brands are starting 2015 with strong momentum. We are investing in our brands to organically grow our core business for the long term. We also continue to invest in OpenTable and our Booking Suite branded hotel marketing services. These investments have a more pronounced impact on profitability in our seasonally low first quarter, but are the right investments to plant seeds for future growth. Today we are also announcing that the Priceline Board has given us an additional authorization to repurchase up to $3 billion of our common stock. We believe that buying our stock is a wise investment of our capital and demonstrates our confidence in the long-term outlook for our business.”

In addition to the adjustments above, adjusted EBITDA excludes depreciation and amortization expense, interest income, interest expense and income taxes and includes the impact of foreign currency transactions and other expenses. When aggregated, the non GAAP adjustments are expected to increase adjusted EBITDA over GAAP net income by approximately $207 million in the first quarter 2015. In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $105 million in the 1stquarter 2015. The Group estimates GAAP net income per diluted share between $5.25 and $5.80 for the first quarter 2015.

Favorable trend

There is a drop in the oil prices and so airfares may go down, too. PCLN is going to benefit from this sudden slump in airfares. This trend is definitely favorable for this online travel company. PCLN can expect to have more customers in its kitty with this drop in crude prices.

To end

The company continues consolidating its leadership position in the online travel industry. The way things are going for the company, investors have solid reasons to expect sustained growth from Priceline. Financial discipline is an important strength that has helped Priceline thrive. The company is a proactive genius that knows how to surprise and delight customers with its offerings. Priceline has ruthlessly pursued every growth opportunity to stay ahead of its competitors.

With a penetration of over 200 countries, Priceline Group is the world’s most valued travel company. I am quite bullish about this company and believe that it is going to create greater shareholder returns.