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TheStreet Open House

[video] Quick Take: Priceline Costs More Than Groupon but Could Be a Better Deal

NEW YORK (TheStreet) -- (PCLN) and Groupon (GRPN) reported earnings on Thursday night. Groupon surprised analysts by reporting a loss of 12 cents a share; a profit of 6 cents per share had been expected.

David Nelson, chief strategist at Belpointe Asset Management, told TheStreet's Debra Borchardt he doesn't know if Groupon's turnaround plan will work. The company has been spending a lot of money trying to enhance its business model and generate customer growth. 

He agreed with Borchardt that investors will likely be too impatient to wait for the turnaround process to take hold. 

On the other hand, Priceline reported great results, beating on the top and bottom lines. The company earned $8.85 per share, beating analysts' expectations of $8.29 per share, on revenue of $1.54 billion. 

However, Nelson said he's surprised to see the stock move higher Friday, given the company's much lower-than-expected guidance. 

Priceline expects earnings per share of $6.35 to $6.85 for next quarter while analysts, on average, expect $7.19 per share. Management cited a later Easter holiday as its reason for the lower guidance. 

Nelson said the company has continued to increase earnings and revenue by roughly 25% per year and trades with a reasonable forward price-earnings ratio of 25. Between Priceline and Groupon, Priceline is cheaper based on valuation. 

While Priceline's share price is roughly 160 times that of Groupon, Nelson said Groupon would need to trade at about $3 per share to be equally valued to Priceline. 

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter.

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