Priceline Group Offers Deep Value For Many Years To Come
When skimming for value stocks, Priceline Group Inc (NASDAQ:PCLN) undoubtedly catches the eye. Stock analysts have coveted this stock for several years and now they are predicting that the online travel stock will post an earnings per share of $57.73. Priceline's brands are Booking.com, agoda.com, KAYAK, OpenTable and rentalcars.com. OpenTable is a recent acquisition by the Priceline Group for $2.6 billion. The company's CEO Darren Huston commented that this purchase would enhance the booking experience for Priceline's global customers.
With a PEG ratio of 1.08, Priceline is undervalued relative to its high-growth potential. While the best value stocks generally have PEG values below 1.0, we can make an exception for Priceline given its massive size and immense reach. Furthermore, the PEG ratio is lower for Priceline in comparison to Expedia Inc. (NASDAQ:EXPE) and Orbitz Worldwide (NYSE:OWW). Additionally, TripAdvisor, Inc (NASDAQ: TRIP) has a reported PEG value of 2.53. So you can definitely see that you can't go wrong with PCLN as you are paying much less for future earnings growth.
The P/E ratio tells a similar story as far as the attractiveness of Priceline is concerned. The 2015 estimate is 20.13 and it is the lowest value when comparing with industry peers. Going forward, Priceline.com continues to be expected to trade an attractive P/E a lot lower than its competitors. Expedia trades at a much higher P/E at 33.47 and will continue to be quite expensive in the estimates for the next two years. Value investors tend to pick the stocks with the lower P/Es in a particular industry. So this metric also makes PCLN look good.
While Wall Street remains fairly cautious on PCLN, it may be time to buy some shares. Most of the analysts' concern centers on increased competition in form of the Expedia Inc. - its chief rival. However, given the stock's attractive valuation multiples and robust fundamental performance, I am inclined to believe that Priceline shares are only going to keep surging higher over the long term.