Priceline.com Inc. (PCLN): Share Price Hits the Road

Shares of Priceline (Nasdaq: PCLN) travel hit the road today when the company lowered guidance for the next quarter. EPS of $1.70, which beat estimates by $0.04, increased 56 percent over the same period last year and revenues were up 26.5 percent to $584.4 million when compared to the year-ago quarter.

Still, the downward guidance spooked investors and the stock sold off sharply, dropping over $35 after the earnings announcement.

The company blamed weather disruptions and widespread cancellations for the lowered expectations.

The Iceland volcano caused widespread disruptions in air travel which resulted in a significant increase in hotel room cancellations for our Booking.com business. Civil unrest in Thailand has substantially impacted hotel room reservations in Thailand, which is a key market for Agoda and Booking.com’s Asia business. Lastly, sovereign debt concerns in Europe have resulted in a significant decline in the value of the Euro as compared to the U.S. dollar which adversely impacts our financial results as expressed in U.S. dollars. ~Jeffery H. Boyd, CEO

Comments: With hefty gains over the last year and a high earnings multiple, the stock is overvalued and is almost certain to fall further. Add to this the risk of future weather disruptions or global unrest and your money would do better elsewhere, including your pocket.

Disclosure: No positions

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