NEW YORK (TheStreet) -- Investors who are interested in Priceline (PCLN) PCLN are probably focused on the company's announcement last month that it has agreed to acquire OpenTable (OPEN) OPEN, an online restaurant reservation service, for $2.6 billion.

They may be overlooking Priceline's rapidly growing car-rental business.

Late last month, Priceline launched a luxury- and specialty-car-rental service called Fun Rides, which could be a big boost for the company. Priceline is offering luxury cars such as BMWs, Mercedes Benzes and Cadillacs as well as specialty cars such as the Mini Cooper and the Toyota (TM) - Get ReportTM Prius.

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Car rentals are a fast-growing part of Priceline's business. First-quarter unit sales, as measured by the number of car rental days, rose 24.6% from a year earlier. That follows a strong year in 2013, when quarterly unit sales growth ranged from 27.5% in the third quarter to 46.3% in the second quarter.

With Fun Rides, which will have Priceline's name-your-own-price model, Priceline is hoping to tap into a large pool of unsatisfied car-rental customers. A company survey found that 51% of Americans are disappointed in their rental car while on vacation.

Priceline already operates, which it bought in 2003. Rental cars are the second biggest part of Priceline after its bread-and-butter hotel-bookings business.  

Investors will have to pay for Priceline's growth. Shares are trading at 32 times trailing earnings, compared with 19.6 for the S&P 500 Index.

The stock closed Tuesday at $1,246.77, up $43.77, or 3.6%. During the last decade, it has soared almost 50 times from about $25 a share, The Nasdaq Composite index has just more than doubled during that period.

But by some measures, the stock is reasonably priced. It trades at 19 times the company's expected earnings for 2015, and its PEG ratio (price-to-earnings ratio divided by the expected earnings growth rate) is 1.18, not a particularly high number.

So investors may want to consider whether Priceline's growth -- boosted by its car-rental business -- makes the company's stock still compelling at current levels. 

At the time of publication, the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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

"We rate PRICELINE GROUP INC (PCLN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 26.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although PCLN's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 5.14, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 31.30% and other important driving factors, this stock has surged by 48.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PCLN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PRICELINE GROUP INC has improved earnings per share by 31.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PRICELINE GROUP INC increased its bottom line by earning $36.01 versus $27.71 in the prior year. This year, the market expects an improvement in earnings ($52.31 versus $36.01).
  • The gross profit margin for PRICELINE GROUP INC is currently very high, coming in at 85.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.17% significantly outperformed against the industry average.