Priceline Group (PCLN) Stock Declining After Announcing $250 Million Investment in Ctrip.com

NEW YORK (TheStreet) -- Shares of Priceline Group  (PCLN) were declining, lower by 0.54% to $1,202 in late morning trading Tuesday, after the company announced that it will invest an additional $250 million in Ctrip.com International (CTRP) earlier this morning.

The company said it will pay the amount through a combination of a convertible bond investment and open market share purchases.

Priceline now has a 10.5% stake in the Chinese travel site.

"We consider Ctrip a market leader in China and we're investing in a company and a team that we believe fits well with our long-term view of China as a market and the Chinese people as global travelers," said Priceline CEO Darren Huston in a statement.

In August, Priceline announced a $500 million buy-in. The company also has the option to increase its stake in Ctrip.com to 15%.

Norwalk, Conn.-based Priceline Group provides online travel company that connects consumers wishing to make travel reservations with providers of travel services around the world.

The company offers consumers accommodation reservations through its various brands.

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 increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Internet & Catalog Retail industry average. The net income increased by 0.6% when compared to the same quarter one year prior, going from $331.22 million to $333.33 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.0%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.14, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, PRICELINE GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PRICELINE GROUP INC is currently very high, coming in at 89.96%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.10% significantly outperformed against the industry average.
  • You can view the full analysis from the report here: PCLN Ratings Report

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