Will Priceline.com (PCLN) Disappoint this Earnings? - Analyst Blog

Priceline.com Inc. PCLN is set to report first-quarter 2014 results on May 8. Last quarter, the company posted 5.0% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Priceline's fourth-quarter earnings exceeded the Zacks Consensus Estimate by 42 cents or 5.5%, driven by strong growth in the online travel industry. Revenues of $1.54 billion were down sequentially but up on a year-over-year basis, attributable to share gains in both domestic and international markets. Also, overall bookings were up 38.8% year over year, reflecting improving demand environment.

Margins were, however, affected in the quarter due to lower volumes.

For the first quarter, Priceline expects revenues to increase 15–25% year over year, and pro-forma earnings per share within $6.35–$6.85. The Zacks Consensus Estimate for the quarter is pegged at $6.26.

Earnings Whispers?

Our proven model does not conclusively show that Priceline.com will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $6.26. Hence, the difference is 0.00%.

Zacks Rank: Priceline has a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider other stocks with a positive Earnings ESP and Zacks Rank #1, 2 or 3 such as:

Advanced Energy Industries, Inc. AEIS, with Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).

Vulcan Materials Company VMC, with Earnings ESP of +5.88% and a Zacks Rank #1.

Unit Corporation UNT, with Earnings ESP of +2.70% and a Zacks Rank #1.