Priceline (PCLN) Stock Soars After Crushing Earnings

Priceline Group (ticker: PCLN), the largest online travel booking company in the world, announced second-quarter results on Thursday that cruised past consensus earnings estimates and were roughly in line with expected revenue. PCLN stock quickly gained more than 4 percent in after-hours trading on the news.

Adjusted earnings per share rose 12 percent from the same quarter last year, coming in at $13.93, as revenue also grew 12 percent to $2.56 billion.

Analysts were expecting EPS of $12.69 on revenue of $2.58 billion.

Priceline itself had previously guided for revenue growth between 7 and 14 percent in the second quarter, expecting adjusted EPS between $11.60 and $12.50. Wall Street is clearly happy that Priceline exceeded even its own expectations.

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Looking ahead to the third quarter, the company guided for revenue growth between 12 and 19 percent and for adjusted EPS between $28.30 and $29.80. Analysts had been looking for EPS of $28.99 on revenue growth of 15.1 percent, which means the midpoints in Priceline's third-quarter guidance -- 15.5 percent revenue growth and EPS of $29.05 -- were each slightly better than expected.

In the second quarter, gross travel bookings, which measures the total dollar value of all travel services Priceline sold, rose 19 percent to $17.9 billion.

"The Priceline Group executed another strong quarter as we witnessed a solid start to the summer travel season," company chairman and interim CEO Jeffery H. Boyd says. "Globally, our accommodation business booked 141 million room nights in the second quarter, up 24 percent over the same period last year."

Boyd, who as the company's CEO between 2002 and 2013 oversaw a decade of tremendous growth, stepped back into the role on an interim basis in April, after former Priceline Group CEO Darren Huston resigned following an internal investigation that revealed an inappropriate relationship he had with a co-worker.

The search for a permanent successor is still underway, but Boyd is a more-than-capable leader in the meantime.

Big picture. K C Ma, professor of finance at Stetson University, thinks that PCLN differentiates itself from "lesser-performing" peers like Expedia (EXPE), Orbitz, and Travelocity through its stake in China's Ctrip.com International (CTRP).

"After Expedia's failure to compete in China in 2011, Priceline moved in with a clever strategy by first offering Ctrip access to American hotel listings through Booking.com, a subsidiary of Priceline. After $1 billion invested, today Priceline owns a 15 percent stake in Ctrip," which is considered a high-growth player in today's global travel industry, Ma says.

[Read: How to Invest in China's Changing Economy.]

It's not hard to see where Ctrip gets that reputation. First-quarter revenue at the China-based online travel company jumped 80 percent.

A new era. The days of meteoric growth for Priceline are probably in the rearview mirror. Priceline is in a more mature phase of its company life cycle, but the period of hypergrowth it once experienced can still be seen by anyone who chances to look at the PCLN stock price.

Priceline, which closed around $1,360 per share on Thursday, boasts the highest share price of any company in the Standard & Poor's 500 index. AutoZone (AZO), at $808 a pop, doesn't even come close.

The reason Priceline's stock is so pricey, of course, is because the company figured out how to do online travel -- and do it well -- early in the game. Priceline has also refused to lower its share price through stock splits; in 10 years, PCLN stock has posted gains just shy of 5,000 percent.

Priceline's gains in 2016 have been more muted, with shares up about 6.7 percent this year going into Thursday's report.

The Priceline Group, whose mission is to "help people experience the world," operates primarily through six brands: Booking.com, priceline.com, Kayak, agoda.com, Rentalcars.com, and OpenTable.

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And while the years of "hypergrowth" may be gone, Priceline's blowout second-quarter earnings make it clear that PCLN can still be one of the highest-flying travel stocks around.

John Divine is a staff writer for U.S. News & World Report. He is also a longtime investor, and has previously written about investing and the markets for InvestorPlace and The Motley Fool. You can follow him on Twitter @divinebizkid or give him the Tip of the Century at jdivine@usnews.com.