If You Like Cash Flow Machines Take A Look At BKNG
Here is why we think Booking (BKNG) is worth a look
- Not many stocks offer free cash flow yield of 5.2%, but BKNG does
- 3-Year average revenue growth of 19.9% and operating margin of 30.8% show good fundamentals
- While tad expensive at PE of 37.2, the combo of cash yield, growth, and margin could still get noticed
- Compared to S&P, while you get higher valuation, you further get higher revenue growth, and better margins
Booking provides global online travel and restaurant reservations, including accommodation, car rentals, and price comparison services through multiple platforms.
| BKNG | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Hotels, Resorts & Cruise Lines | – |
| Free Cash Flow Yield | 5.2% | 3.9% |
| Revenue Growth LTM | 11.7% | 5.0% |
| Revenue Growth 3YAVG | 19.9% | 5.8% |
| Operating Margin LTM | 32.8% | 18.8% |
| Operating Margin 3YAVG | 30.8% | 17.7% |
| PE Ratio | 37.2 | 23.5 |
But do these numbers tell the full story? Read Buy or Sell BKNG Stock to see if Booking still has an edge that holds up under the hood.
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
- Better Value & Growth: ABNB, BKNG Lead Hyatt Hotels Stock
- Pay Less, Gain More: BKNG, RCL Top Marriott International Stock
- Booking Stock Hits Key Support – Buying Opportunity?
- Pay Less, Gain More: ABNB, BKNG Top Hyatt Hotels Stock
- ABNB, BKNG Look Smarter Buy Than Hyatt Hotels Stock
- Stronger Bet Than Marriott International Stock: BKNG, RCL Deliver More
The Point? The Market Can Notice, And Reward
Here are some stocks that showed strong cash flow yield in mid 2024, and saw strong returns in the subsequent 12 months
- FFIV gained 70% in a year after showing a 6.9% free cash flow yield
- CSCO had 6.6% yield, and returned 50% in the next 12 months
- PM rose over 85% percent as the market noticed its 5.7% free cash flow yield and good underlying revenue growth
But Consider The Risk
That said, BKNG isn’t immune to big drops. It plunged nearly 100% in the Dot-Com Bubble and fell around 66% during the Global Financial Crisis. The 2018 correction and inflation shock knocked it down roughly 27% and 40%, respectively. Even the Covid selloff led to a 45% dip. The stock has strength, but when turbulence hits, steep declines still happen.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read BKNG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.