Have you been paying attention to shares of Booking Holdings (BKNG)? Shares have been on the move with the stock up 7.2% over the past month. The stock hit a new 52-week high of $5337.2 in the previous session. Booking Holdings has gained 49.4% since the start of the year compared to the 34.6% move for the Zacks Retail-Wholesale sector and the 44.5% return for the Zacks Internet - Commerce industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 30, 2024, Booking Holdings reported EPS of $83.89 versus consensus estimate of $77.94 while it beat the consensus revenue estimate by 4.76%.
For the current fiscal year, Booking Holdings is expected to post earnings of $181.49 per share on $23.42 billion in revenues. This represents a 19.23% change in EPS on a 9.62% change in revenues. For the next fiscal year, the company is expected to earn $209.95 per share on $25.29 billion in revenues. This represents a year-over-year change of 15.68% and 7.98%, respectively.
Valuation Metrics
Booking Holdings may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Booking Holdings has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 29.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.9X. On a trailing cash flow basis, the stock currently trades at 30.5X versus its peer group's average of 15.9X. Additionally, the stock has a PEG ratio of 2.14. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Booking Holdings currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Booking Holdings meets the list of requirements. Thus, it seems as though Booking Holdings shares could still be poised for more gains ahead.
How Does BKNG Stack Up to the Competition?
Shares of BKNG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Carvana Co. (CVNA). CVNA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of F, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. Carvana Co. beat our consensus estimate by 178.26%, and for the current fiscal year, CVNA is expected to post earnings of $2.66 per share on revenue of $13.45 billion.
Shares of Carvana Co. have gained 2.8% over the past month, and currently trade at a forward P/E of 217.31X and a P/CF of 379.26X.
The Internet - Commerce industry is in the top 29% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BKNG and CVNA, even beyond their own solid fundamental situation.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
