Why Booking Holdings Loses Altitude Today – The Motley Fool


What happened

After the publication of the fourth quarter results, the actions of the tourism giant Booking Funds (NASDAQ: BKNG) dropped to 10% early in the session on Thursday. The stock was down about 9% at 12:23. IS.

So what

Here is an overview of the fourth quarter figures:

  • Revenues jumped 15% to $ 3.21 billion. This corresponds to the number expected by analysts.
  • Adjusted net income increased 25% to $ 1.05 billion.
  • Adjusted earnings increased 33% to $ 22.49 per share. This far exceeded the company's expectations and also exceeded the expectations of $ 19.42 EPS expected by analysts.

By zooming in on the 2018 annual results, here is an overview of the key figures:

  • Revenues increased 17% to $ 14.5 billion. This figure corresponds to the estimate of Wall Street.
  • Non-GAAP net income increased 16% to $ 4.4 billion.
  • Non-GAAP EPS increased 20% to $ 92.59. This figure is ahead of the $ 89.70 expected by market watchers.
Woman and girl standing next to luggage

Source of the image: Getty Images.

Booking Holdings CEO Glenn Fogel was modest in his commentary for the year:

2018 was a good year for Booking Holdings as we achieved many financial and strategic goals. In 2018, we have reached a new milestone, exceeding three quarters of the one billion reserved nights, and generated strong growth from one year to the next on all of our financial indicators.

So, if the company has finished 2018 strong, why are stocks falling? The blame can be placed solely on the shoulders of the company management:

  • The adjusted revenue growth for the first quarter of 2019 is expected to be in the negative range of 1% to 1%. Wall Street was expecting a growth of 8%.
  • Adjusted net income for the first quarter of 2019 is expected to be in the range of $ 495 million to $ 510 million, or $ 10.90 to $ 11.20 per share. This figure is well below the current consensus estimate of $ 12.78.
  • Non-GAAP EPS for full-year 2019 is expected to grow at "very low double digits" on a currency neutral basis.

Given the gloomy forecasts, we understand why stocks are selling today.

Now what

The Booking Holdings forecasts seem certainly disappointing on the surface. However, it should be noted that gross travel bookings are expected to increase by 5% to 7% if they are considered at constant exchange rates. This suggests that the main brands of this company remain as popular as ever.

In addition, Booking's management team has always been very cautious with its advice. That's why this happy shareholder is going to take these indicative figures with a big grain of sugar.

Brian Feroldi owns shares of Booking Holdings. The Motley Fool owns shares and recommends Booking Holdings. Motley Fool has a disclosure policy.

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