Will Priceline.com (PCLN) Disappoint this Earnings Season? - Analyst Blog

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Priceline.com Inc. ( PCLN ) is set to report second-quarter 2014 results on Aug 11. Last quarter, the company posted a 13.3% positive surprise. Let's see how things are shaping up for this announcement.

Factors to Consider this Quarter

Priceline's first-quarter earnings beat the Zacks Consensus Estimate by 83 cents or 13.3%, driven by strong growth in the online travel industry. Revenues of $1.64 billion were up sequentially as well as on a year-over-year basis, attributable to share gains in both domestic and international markets. Kayak remained a major contributor. Also, overall bookings increased 34.4% sequentially and 34.2% year over year, reflecting improving demand environment.

Margins were, however, affected in the quarter due to an unfavorable mix.

For the second quarter, Priceline expects revenues to increase 19-29% year over year, and pro-forma earnings per share within $11.22-$12.02. The Zacks Consensus Estimate for the quarter is pegged at $11.33.

Earnings Whispers?

Our proven model does not conclusively show that Priceline.com will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP :  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $11.33. Hence, the difference is 0.00%.

Zacks Rank : Priceline has a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider other stocks with a positive Earnings ESP and Zacks Rank #1, 2 or 3 such as:

Cooper Tire & Rubber Co. ( CTB ), with an Earnings ESP of +1.69% and a Zacks Rank #1 (Strong Buy).

Myriad Genetics Inc. ( MYGN ), with an Earnings ESP of +4.35% and a Zacks Rank #1.

Callon Petroleum Company ( CPE ), with an Earnings ESP of +5.88% and a Zacks Rank #1.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: PCLN , MYGN , CTB , CPE

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