Is Booking Holdings a buy?

It’s time to break down a popular travel name. Here is the break down on $BKNG, otherwise known as Booking Holdings.

Current Price: $2,329.84

52/Wk High: $2,469.58

52/Wk Low: $1,203.08

Market Cap: $95.2 Billion

Read below for the breakdown!

Booking Holdings ($BKNG) is a leader in the online travel and services industry, providing services in over 220 countries and territories.

Inspecting Booking Holdings, the company operates through six core brands; Booking.com, PriceLine, Agoda.com, KAYAK, OpenTable, and RentalCars.com.

Breaking down the stock price by segment, below are the results according to TREFIS (@trefis) data.

Agency: 72.2%

Merchant Bookings: 19.2%

Advertising and Media: 5.2%

Cash: 3.5%

Of recent, travel names have continued to move to the upside given the economic recovery and loosening travel restrictions which in turn has lead Booking Holdings on a 7.14% rally over the course of the last three months.

Digging into the numbers Booking Holdings beat Q4 expectations with an EPS of $-0.57, better than the analyst’s EPS consensus estimate of $-4.28. On a year-over-year basis, EPS declined -102.45%.

On the revenues front, total revenues for the quarter declined by 63% year over year to a much weaker $1.2 billion. For comparison, the Q4, 2019 total revenues level was $3.339 billion.

Breaking revenues down by segment the fourth-quarter results are below.

Agency: $810 Million

Merchant: $376 Million

Advertising & Other: $52 Million

Furthermore, Booking Holdings reported an unfortunate loss of $165 million, representing a huge downside swing from the net income in Q4 2020 of $1.2 billion.

As for operating expenses, total operating expenses declined throughout Q4 to $1.381 billion from $2.167 billion in Q4 of 2019.

Rounding out the quarter, operating income totaled a loss of $153 million for Q4, much worse than the Q4 2019 operating income of $1.172 Billion.

Shifting into the full year, revenues totaled $6.796 billion in FY 2020, much worse than the FY 2019 revenues level of $15.066 billion.

As for operating income, Booking Holdings reported a $631 million operating loss for FY 2020, much lower than the FY 2019 operating income level of $5.345 billion.

Overall, earnings were very negative as a result of the COVID-19 pandemic and a lack of travel, which virtually brought Booking Holdings to a halt.

Management commented on the quarter.

"The travel environment continued to be challenging through the fourth quarter of 2020 and into January 2021 as COVID-19 case counts remained very high and travel restrictions were reimposed in many parts of the world.” CEO Glenn Fogel said.

Management was hopeful though.

“However, in recent weeks, we have started to see some improvements in booking trends that we will continue to monitor," Fogel said.

Shifting into the balance sheet the numbers are solid.

Total Debt: $12.014 Billion

Total Liabilities: $16.981 Billion

Total Assets: $21.874 Billion

Cash & Short Term Inv: $11.063 Billion

On a valuation basis, Booking Holdings does trade at a premium.

Price to Earnings: 1884.50x

Forward Price to Earnings: 24.92x

Price to Sales: 13.74x

Price to Book: 19.54x

Management has been effective but could improve.

Return on Equity: 0.94%

Return on Assets: 0.24%

Return on Invested Capital: 0.30%

Given the numbers the analysts are bullish with a mean price target of $2,500/share, representing a 6.81% upside.

The high price target is $3,000/share, representing a 28.18% gain, while the low price target is $1,890/share, representing a -19.24% upside.

The big money is also quite involved, with 94.35% of Booking Holdings being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and T. Rowe Price Associates.

On a technical basis, Booking Holdings is solid. According to six-month charts, the MACD is attempting to cross back to the upside within a tight range of 21.28 down to 15.13.

The six-month charts are also indicating an RSI of 53.81 and CCI of 16.05, both of which are more neutral than anything.

In short, Booking Holdings ($BKNG) is a solid travel play that prior to the pandemic was quite strong. While it does trade at a significant premium a mix of bullish sentiment and solid fundamentals make it a solid long-term investment.

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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.