Personal Finance

The Priceline Group Isn't Worried About Politics

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Recent developments for new business

The big highlight from the third quarter was the loss from the OpenTable business, which was acquired in 2014 for about $2.6 billion. Priceline realized a loss of $941 million related to goodwill impairment, which occurs when the fair value of a business is less than the value being accounted for on the books. Specific numbers for OpenTable were not given in the Priceline press release, but management said the loss resulted from a "change in business strategy" related to OpenTable's international expansion and "other growth opportunities." OpenTable will continue to grow at a more measured pace in the years to come, management said.

However, offsetting that negative item was acceleration in both room nights booked and rental-car days. Booked rooms grew 29% year over year, driven primarily by the company's largest subsidiary, The accommodations agent is still growing its available properties, which reached 1 million worldwide this summer. New rollouts for the platform include Booking for Business, and the addition of non-hotel accommodations like condos, apartments, and private homes.

Growth of rental-car days also accelerated back into the double digits with nearly 13% year-over-year growth. faltered last quarter and posted only 8% growth, a metric that had been in the double digits for the last few years. The higher rate was welcome news, as rental cars are a key driver of Priceline's growth.

The KAYAK business announced its expansion into both Latin America and Asia. will be breaking ground on new headquarters of 753,000 square feet in Amsterdam; besides increasing efficiency by bringing all staff together in one location, management feels the real estate will be a good investment for its international cash.


Image source: Priceline.

What investors should look for next

After a knockout quarter for top-line growth, Priceline management sees booked room-nights growth slowing down in the fourth quarter. The primary catalyst for expansion isn't expected to suffer from global uncertainty so much; it is just a slower time of year for travel. The company sees gross profit increasing 13% to 18% in the fourth quarter, fueling a net profit increase of 14% to 20% year over year.

The third quarter showed "broad-based strength, and the macro environment feels relatively healthy for us," CFO Daniel Finnegan said in the conference call with analysts. "That same story has continued thus far in Q4."

With business humming along, Priceline's management is not concerned with politics, and investors shouldn't be either.

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Nicholas Rossolillo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Priceline Group. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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

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

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