Trade-Ideas: Priceline Group (PCLN) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Priceline Group ( PCLN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Priceline Group as such a stock due to the following factors:

  • PCLN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $655.7 million.
  • PCLN has traded 668,444 shares today.
  • PCLN traded in a range 248.7% of the normal price range with a price range of $39.88.
  • PCLN traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PCLN:

The Priceline Group Inc. provides online travel and travel related reservation and search services. PCLN has a PE ratio of 26. Currently there are 14 analysts that rate Priceline Group a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Priceline Group has been 605,100 shares per day over the past 30 days. Priceline Group has a market cap of $60.8 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.88 and a short float of 2.6% with 2.66 days to cover. Shares are up 2.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Priceline Group as a buy. 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. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 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.

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