Booking Holdings (NASDAQ: BKNG), the world’s largest online travel agency that offers services ranging from accommodation and plane tickets to car rentals, is expected to report its fourth quarter tax results on Wednesday February 24. lower as its earnings may miss the Q4 consensus estimate as earnings are in line. The travel industry was beaten in 2020 as the onset of the pandemic led people to stop traveling, forcing travel companies such as BKNG to close global offices and eliminate a quarter of their workforce . While Booking Holdings saw demand rebound in Q3, its numbers were still well below 2019 levels. In fact, air travel and vacation trends are unlikely to fully recover until the Covid-19 threat is over. not passed. The point is, leisure travel will come back at some point, but business travel has a very difficult path to cover as virtual collaboration tools have never been cheaper or more readily available. As Covid-19 cases continue to rise and many parts of the world are once again on lockdown, Booking Holdings will continue to have a difficult period in the short term despite vaccine deployments.
Our forecast indicates that Booking Holding’s valuation is above $ 2,164 per share, which is 6% below the current market price of around $ 2,293. Watch our interactive dashboard analysis at Reservation of pre-income assets: What to expect in the fourth quarter? for more details.
(1) Revenue expected in line with consensus estimates
Trefis estimates Booking Holdings’ revenue for the fourth quarter of 2020 at around $ 1.2 billion, in line with the consensus estimate. Booking Holdings revenue has fallen 53% year-over-year (year-over-year) so far in fiscal 2020. For the third quarter, the travel booking site saw demand rebound, but the numbers were still well below 2019 levels. The company’s revenue grew sequentially, from just $ 63 million in Q2 2020 to $ 2.6 billion in Q3 2020. But revenues were still down 48% from last year’s quarter levels in the third quarter. A similar sequential rebound was seen in car rental days, airline tickets and booked overnight stays in the third quarter. For the full year, we expect Booking Holdings’ revenue to decline by 55% year-on-year.
(2) EPS may slightly miss consensus estimates
Booking Holdings earnings per share in Q4 2020 is expected to translate into a loss of $ 3.90 according to Trefis analysis, slightly lower than the consensus estimate of -3.85 $. In the first nine months of 2020, profits fell 94% year-on-year. That said, the action of the online travel booking site could still weather the Covid storm due to its strong liquidity position. The company has $ 14.9 billion in cash and investments, and nearly $ 850 million in free cash flow (generated in the third quarter), against heavy debt of nearly $ 11 billion. With around half of its spending coming from sales and marketing, Booking Holdings has high variable costs, making it easier for the business to conserve cash and survive the downturn, including a difficult vacation period in 2020 and likely limited gains in travel demand in the first half of the year. from 2021.
(3) Estimate of the share price lower than the current market price
According to our Booking Holding’s assessment, with an estimated revenue per share of around $ 165 and a P / S multiple of just over 13x in fiscal 2020, this translates to a price of 2,164 USD, which is 6% lower than the current market price of approximately USD 2,293. .
While BKNG shares may trade lower after the fourth quarter results, 2020 has created many price discontinuities that may provide some interesting trading opportunities. For example, you’ll be surprised at how the valuation of Google stocks relative to Corcept Therapeutics shows a disconnect with their relative operational growth. You can find many discontinuous pairs here.
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