Priceline (PCLN) Stock Plunges on Weak Earnings Outlook, Jim Cramer Comments

Priceline Group (PCLN) shares are diving, the result of the U.S. online travel agent's lower-than-expected fourth quarter profit forecast, despite reporting strong third quarter 2015 earnings results this morning.
By U-Jin Lee ,

NEW YORK (TheStreet) -- The Priceline Group (PCLN)  shares are diving 6.35% to $1,357.90 in Monday's pre-market trading session, the result of the U.S. online travel agent's lower-than-expected profit forecast, despite reporting strong third quarter 2015 earnings results this morning that beat analysts' estimates. 

The company now expects fourth quarter 2015 earnings to be between the range of $11.10 a share to $11.90 a share, below analysts' expectations of $12.38 a share. 

This guidance comes as competition in the online travel industry from companies like Expedia (EXPE) and Airbnb is growing, according to Bloomberg

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio, commented on Priceline saying: "It's always paid to buy Priceline into the perceived guidance disappointment and I don't think this time is any different."

For the recent quarter, the company earned $25.35 a share on revenue of $3.1 billion.

These results beat analysts' forecasts of $24.23 a share on revenue of $3.05 billion. 

In the same period a year ago, the company earned $22.16 a share on revenue of $2.84 billion. 

"Globally, our accommodation business booked a record 116 million room nights in the 3rd quarter, up 22% over the same period last year," CEO Darren Huston stated.

Additionally, the company saw strong total gross travel bookings and international gross travel bookings during the latest quarter. 

Separately, TheStreet Ratings team rates PRICELINE GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate PRICELINE GROUP INC (PCLN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

You can view the full analysis from the report here: PCLN

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