By Steven Russolillo 

Priceline Group Inc.'s stock price is north of $1,600. It isn't as expensive as it looks.

Priceline long ago graduated from just a euphoric internet stock to a successful online travel agency. Since 2001, as the tech bubble was bursting, shares have surged at a 40% annual rate, pushing Priceline's market capitalization above $80 billion.

Priceline is the only S&P 500 stock with a quadruple-digit share price. The next closest are Google parent Alphabet Inc. and Amazon.com Inc., both with prices roughly half of Priceline's. Sticker shock shouldn't fool investors ahead of Monday's earnings report, the first under new Chief Executive Glenn Fogel .

Analysts polled by FactSet expect earnings of $12.89 a share, up 2% from a year earlier. Revenue is estimated to have increased 16% to $2.3 billion.

Priceline relies on booking commissions for growth, benefiting from websites Kayak.com, Booking.com and its namesake Priceline.com. International opportunities have helped juice growth in recent years. Analysts' long-term projections are optimistic, too, as double-digit annual earnings growth is expected through 2020, according to FactSet.

Over the past five years, Priceline has exceeded quarterly earnings estimates all but twice. One of those misses came in November, when it took a $941 million write-down on OpenTable. Priceline bought OpenTable for $2.6 billion for 2014, a surprise at the time considering Priceline historically had focused its investment on travel brands.

That rare misstep might not deter Priceline from future deals, particularly as it is now under the helm of Mr. Fogel. A former trader at Morgan Stanley and longtime Priceline employee, Mr. Fogel was instrumental in key deals more than a decade ago for Booking BV, which helped Priceline expand in Europe, and reservation service Active Hotels.

Most travel-related stocks have surged following the election, with many leaving Priceline behind. A basket of hotels, timeshares, cruise operators and airline stocks tracked by Rob Sanderson of MKM Partners is up 22% on average since Nov. 8, exceeding the S&P 500.

Priceline has long outperformed the rest of the online travel industry, but since the election it has lagged behind in a big rally, up just 4%. The company's shares are a bit pricey, fetching 22 times projected earnings over the next 12 months, but below a recent peak of 25 times three years ago. The stock is also cheaper than many rivals.

If the travel industry stays strong, Priceline has more room to go.

 

(END) Dow Jones Newswires

February 26, 2017 15:49 ET (20:49 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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