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Proprietary Data Insights Financial Pros’ Top Travel Services Stock Searches in the Last Month
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The Rise of Revenge Travel |
Revenge travel…a phenomenon borne from the frustration of Covid lockdowns. People want to make up for lost time, to see the world. It’s helped airline demand skyrocket, hotels push reservations out months in advance, and shares of Booking Holdings (BKNG) gain almost 40% year-to-date. In fact, financial pros began searching for this stock in earnest starting in mid-June, as our TrackStar data illustrates below.
After such a huge run this year, we wondered whether it’s worth scooping up shares now or waiting for a pullback. To answer this, we needed to give BKNG some economic context. Booking Holdings’ Business Booking Holdings Inc., one of the world’s largest online travel companies, might be a familiar name to travel buffs, food lovers, or car rental users. The company’s 21,000 employees cater to travel needs and dining experiences in over 220 countries and territories. The company’s portfolio comprises well-known brands, including Booking.com, KAYAK, Priceline, Agoda, Rentalcars.com, and OpenTable. Services provided under these brand umbrellas range from hotel room bookings, airline ticket reservations, rental cars, vacation packages, cruises, and dinner reservations to ‘things to do’ at customer destinations. And as if that wasn’t enough, they also offer travel insurance. BKNG boasts agreements with an extensive list of hotels, airlines, cruise ships, transport companies, and vacation providers, allowing them to accept bookings on their behalf, providing customers with a myriad of options to choose from. Their revenue reporting segments are divided into two main categories, both with revenues split fairly evenly:
Financials
Source: Stock Analysis Booking Holdings’ recent first quarter 2023 financial results painted a rosy picture. The company achieved all-time quarterly highs with 274 million room nights and gross bookings of $39.4 billion, reflecting YoY growth rates of 38% and 44%, respectively. Total revenues for the first quarter reached $3.8 billion, a 40% increase from the prior-year quarter, with net income doubling to $1.4 billion. This impressive performance can be attributed to robust leisure travel demand and an extending booking window, notably in Europe and the U.S. Operating cash flow is at an all-time high and almost $200 per share of free cash flow. Plus, they hold more cash than total debt. Valuation
Source: Seeking Alpha Despite the recent surge in revenue growth, the P/E multiples aren’t as high as expected, nor is the price-to-cash flow ratio. Competitors like Tripadvisor (TRIP) and Expedia (EXPE) have better price-to-cash flow ratios, while one has a higher P/E ratio and the other lower. Then you have Trip.com (TCOM), and Makemytrip (MMYT), which have worse ratios in both categories. Growth
Source: Seeking Alpha Despite BKNG landing in the middle on valuation, it’s got some of the best revenue, EBITDA, and earnings growth looking backward and forward, implying it’s more consistent in its results. Profitability
Source: Seeking Alpha It’s also surprising to see BKNG with margins so much wider than any of its peers. That’s helped it produce some incredible returns on assets, equity, and total capital. Our Opinion 8/10 We’re always happy to find a quality stock we hadn’t considered. Booking Holdings delivers consistent returns, recovering nicely from the pandemic. The company maintains a diverse portfolio of offerings within the same vertical, which in our opinion, gives them a competitive edge. While the stock is overstretched at the moment, we like it on pullbacks. |
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