Gordon Reid Booking Holdings Inc. BKNG-Q STRONG BUY Mar 18, 2025

Very competitive marketplace. Down today on overwhelming concern about consumer spending and prospects for travel for the next 12 months. Better positioned than EXPE, because Expedia's multiple brands cause confusion.

Generative AI is a concern for the future, as it may circumvent the go-between status of BKNG and EXPE and provide a personalized travel experience.

Airlines in general have high debt levels, economic risk, sensitivity to the consumer, fuel price volatility. In the travel space, he'd rather own a BKNG or EXPE, where there are no capital costs. Or even a cruise line, which has demographics behind it.

Has owned this for nearly 25 years when it was Priceline.com. An asset-lite company, so few capital investments. Their success comes from relationships with European hotels, which are small and not big chains (as in the U.S.). BKNG now owns Kayak, Open Table among many.  Connected Trips is their latest success. Trades below the market PE. He predicts $200 EPS in the next report, so growing rapidly. People continue to travel.

BKNG has done pretty well since that price target. All the engines for value creation have worked quite well recently, with high single-digit revenue growth and aggressive capital return policies. We expect BKNG will continue to do well in the near term and we would be comfortable revisiting BKNG again if it drops below $3900.
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Has long owned this, the consummate growth company. They will like pass $200 EPS in 2025 vs. $10 EPS 15 years ago. Trades at only a 10% premium to the market. 

The last quarter was good, with an 8% 'beat' on earnings. It is expected to show at least 15% earnings growth in 2025. It has a very strong balance sheet with no net debt. It is priced OK at 27X earnings. It is sensitive to the economy and interest rates, but we are comfortable with the outlook. We would be comfortable buying today.
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BKNG has been an amazing compounding machine. The stock is up +21,000% in the past 20 years. It has managed its growth well, made excellent acquisitions, managed recessions and kept its balance sheet strong. We have followed the company since shares were $20 (now $4,700). Good growth is still expected and its free cash flow is starting to really grow ($8B+ now). Even with massive growth it has reduced its share count by nearly 40% in the past decade. There are always risks, but this is one of our favorite growth stocks and is not even that expensive at 26X earnings. 
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BOOK decided to be an agent only, so they take a commission on every transaction. Operating margins of 30%. Investors like the capital-light model, giving it a higher multiple between high 20s or almost 30x PE. Today though, PE in low 20s.

EXPE buys hotel rooms in bulk and then resells them; takes more risk and more capital. Operating margins of 10%. PE usually around 20x. PE today is in low teens. Though not as good a business, valuation discount is excessive. Better risk/reward.