Opinions
The Panic-Proof Portfolio (Stockchase Research)
Booking Holdings Inc.
BKNG-Q
PAST TOP PICK
May 01, 2025
Stock price when the opinion was issued
You might be interested:
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.
Unlock Premium - Try 5i Free
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.
Unlock Premium - Try 5i Free
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.
Fantastic, growing fast, yet trades at only 18-20x PE. Low-capital and innovative with smart managers. Diversified geographically. Booking.com is the cornerstone, built on European mom-and-pop hotels that grew successfully from there. He first bought this 30 years ago when this was Priceline.
Premium contentThe well known online travel booking platform has seen revenues grow 9% annually over the past 7 years. Its platform includes a broad range of accommodation, car rental, and air travel opportunities where margins continue to grow. Its dividend is backed by a payout ratio under 20%. Cash reserves are growing as the company buys back shares. We recommend setting a stop-loss at $3600, looking to achieve $5700 — upside potential of 19%. Yield 0.8%
(Analysts’ price target is $5707.34)Premium contentEPS of $55.40 beat estimates of $50.38; revenue of $6.79B beat estimates of $6.55B. EBITDA of $2.42B beat estimates by 10%. Booking's revenue view remains muted, with the US still the slowest-growing region despite some recovery in 2Q. Asia is now the fastest-growing market, and management predicts high-single-digit industry growth there over the medium term, making it central to the company's broader strategy. Gains in alternative accommodations outpaced the core hotels business, with listings reaching $8.4 million, up 8% year over year. Analysts expect 7.8% revenue growth for 3Q, in line with guidance of 7-9%, which is slightly below the company's gross-bookings view of 8-10% due to a higher mix of flight bookings and increased merchandise and contract revenue. 3Q adjusted Ebitda margin is 46.4%, as continued marketing expense leverage is offset by rising merchandising spending and sales costs. It is not the best outlook, but all things considered decent enough. The stock is still up 52% over the past year, and strong earnings growth is expected into 2026/27. The balance sheet also remains solid. It is 25X earnings. Note cheap, but in the lower part of its historical range. We would remain comfortable buying.
Unlock Premium - Try 5i Free
Our PAST TOP PICK with BKNG is progressing well. To remain disciplined, we recommend trailing up the stop (from $3600) to $4000 at this time.