Booking Holdings (NASDAQ:BKNG), the world’s largest online travel agency that offers services ranging from accommodations to airfares to car rentals, is expected to report fiscal first-quarter results on Wednesday. May 4. We expect the company’s shares to likely trade higher with revenue and earnings above market expectations. We expect BKNG’s continued investments in alternative accommodation, payments, flights and merchandising to help it gain a share of the broader long-term travel market. Additionally, the company’s structurally higher profitability, compared to pre-pandemic levels, looks like a win for the company.
Booking Holdings derives the majority of its revenue from the European market, which took a series of economic measures in response to Russia’s invasion of Ukraine. To add to this, a drop in the number of travelers from Russia, currently banned, could also have a modest impact on BKNG’s business in the coming quarters.
Our forecast indicates that the valuation of Booking Holdings is $2,328 per share, or 5% above the current market price. Watch our interactive dashboard analysis at Overview of Booking Holdings Earnings: What to expect in the first trimester? for more details.
(1) Expected revenue slightly above consensus estimates
Trefis estimates Booking Holdings’ revenue for the first quarter of 2022 at around $2.6 billion, a slight increase from the consensus estimate level. The company reported revenue of $3 billion, up 140% year-over-year (year-over-year) in the fiscal fourth quarter. On the face of it, travel is recovering well from pandemic-related restrictions in 2020. It’s worth noting that fourth-quarter revenue was still about 10% lower than the $3.3 billion the company reported at the same time. quarter two years ago. Additionally, Booking Holdings’ gross bookings grew 160% in the fourth quarter, driven by strong demand in agency and merchant channels. To add to that, the company’s overnight stays were up 100% year-over-year, car rental days were up 36% year-over-year, and airfares were up 108%. Despite the negative impact on travel from the Omicron wave at the end of the fourth quarter, adjusted EBITDA was better than expected and came in at $940 million versus $38 million a year ago.
For the full year 2022, we expect Booking Holdings’ revenue to grow 49% year-on-year to $16.3 billion.
(2) EPS likely to be in line with consensus estimates
Earnings per share for Booking Holdings for the first quarter of 2022 are expected to be $1.80 according to Trefis analysis, comfortably beating the consensus estimate. The year-over-year revenue recovery translated into much better profitability, with net profit climbing to $618 million from a loss of $165 million a year ago in the fourth quarter of 2021 .
(3) Stock price estimate higher than current market price
Based on our Booking Holdings valuation, with an estimated earnings per share of approximately $92.11 and a P/E multiple of 25.3x for FY2022, this translates to a price of 2,328 USD, which is 5% above the current market price.
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