What To Expect From Booking Holdings’ Stock Post Fiscal Q4?

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BKNG: Booking Holdings logo
BKNG
Booking Holdings

Booking Holdings (NASDAQ: BKNG), the world’s largest online travel agency that offers services from lodging to airline tickets to car rentals, is scheduled to announce its fiscal fourth-quarter results on Wednesday, February 23. We expect the company’s stock to likely trade sideways due to mixed FY Q4 2021 results with earnings beating expectations but revenues falling slightly short. BKNG has benefited from mass vaccinations and has noticed encouraging trends in booking rates in the countries where vaccine distribution is being organized successfully in the three quarters of 2021. But still, the travel sector has been only recovering in fits and starts due to waves of the pandemic drifting around for the majority of 2021. That said, business is close to pre-pandemic levels but still hasn’t quite recovered. The company’s Q3 revenues were up almost 77% year-over-year (y-o-y) but still 7% down from the third quarter in 2019. Going forward, the company didn’t give any specific guidance, but they did mention that revenue would sequentially decline more against 2019 in the fourth quarter as compared to Q3. This could be due to the fact that the company has more exposure to Europe, and the third quarter was its peak season.

Our forecast indicates that Booking Holdings’ valuation is $2624 per share, which is in line with the current market price. Look at our interactive dashboard analysis on Booking Holdings Earnings Preview: What To Expect in Q4? for more details.

(1) Revenues expected to be marginally below the consensus estimates

Trefis estimates Booking Holdings’ Q4 2021 revenues to be around $2.8 Bil, a slight decline from the consensus estimate level. Q3 gross travel bookings rose 77% from last year to $23.7 billion, while total revenues increased a similar percentage amount to $4.7 billion. Revenue more than doubled from Q2 2021, driven in part by seasonality. In fact, all sources of revenue showed substantial increases with agency revenues up 66%, merchant revenues up 94%, and advertising revenues up 133%. In addition, marketing expenses also increased accordingly, up 89% y-o-y.  For the full-year 2021, we expect Booking Holdings revenues to grow 60% y-o-y to $10.9 billion.

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(2) EPS likely to be in line with consensus estimates

Booking Holdings’ Q4 2021 earnings per share (EPS) is expected to come in at $13.70 as per Trefis analysis, in line with the consensus estimate. In Q2, the company’s earnings-per-share tripled from a year ago to $37.70 but were still down from two years ago level of $45.36.

(3) Stock price estimate matches the current market price

Going by our Booking Holding’s Valuation, with a revenue per share (RPS) estimate of around $268.83 and P/S multiple of just around 9.8x in fiscal 2021, this translates into a price of $2624, which is in line with the current market price.

It is helpful to see how its peers stack up. BKNG Peers shows how Booking Holdings compares against its peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BKNG Return 7% 9% 78%
 S&P 500 Return -4% -9% 94%
 Trefis MS Portfolio Return -2% -11% 251%

[1] Month-to-date and year-to-date as of 2/22/2022
[2] Cumulative total returns since the end of 2016

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