Booking Holdings Inc. (BKNG-Q)

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.

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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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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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. 

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 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.

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.

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.

He'd rather own businesses hurt during pandemic, but are better today. Cruising business is tough. He'd rather own a BKNG, ABNB, MAR or HLT.

It's a play on travel; people keep travelling and airlines are full as the boomers keep travelling. Remains a cheap stock, below the market multiple.

BKNG is now trading at 20.4x times the forward P/E. In the 4Q-2023, BKNG’s revenue grew 18% to $4.8B, beating estimates of $4.7B and EPS was $32.00 beating estimates of $30.05, the results beat both top and bottom lines. The balance sheet is strong, with a net debt of $15B and net debt/EBITDA of 0.3x. Based on consensus estimates, sales are expected to grow by 9% over the next few years. Overall, a decent quarter, but some concern over Middle East bookings hurt sentiment. The company has been repurchasing shares aggressively in recent quarters and started to pay dividends for the very first time, which we like. The valuation here is not too expensive, and we think the drop may offer attractive entry points. It may face a E500 million fine for competitive pricing in Spain, but on its $120B market cap this is essentially just a cost of doing business and highlights its market dominance.
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Shares were beaten down 10% today, but their sales are growing 11-12%. Business would be better if not for the war in the Middle East.

They just reported, but shares fell. Gross bookings, revenue and adjusted EPS all beat. Some of these were record numbers, and they bear their peer, Expedia in some categories. But the market punished them for their dour guidance, particular the impact of the Israel-Hamas was. Booking's business is international, with only 13% of sales from the U.S. Trades at a high 17x 2024 PE.

Not just online travel bookings, but they also car rentals, Open Table for restaurant bookings, and Kayak, so they cross-sell. Highly profitable. They earn $140/share in 2023 and projects $160 in 2024. Not expensive.

Total obligations have gone from $13.1B at year end 2022 to $14.5B at June 30 2023. While $1.4B is a 'lot' we also note that cash grew $500M in the same period, and total cash is $15.7B, more than total debt. Thus, we would not consider debt high at all here in the big picture. Also, the balance sheet movements largely reflect a massive amount ($9B) of share buybacks in the past year. With near $7B in free cash flow annually, we would consider the balance sheet exceptionally strong. 
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