Booking Holdings (BKNG) Earnings Under the Microscope: A Buy or Sell Opportunity?

Booking Holdings Inc. (BKNG), a leading entity in the travel services sector, is witnessing significant growth fueled by robust travel demands, which are overshadowing prevalent economic concerns and the rise in costs. As evidenced by its second-quarter results, gross travel bookings recorded a notable increase of 15% from the same quarter last year, reaching $39.70 billion.

The company also surpassed its financial expectations, reporting total revenues of $5.46 billion, a considerable jump from the analysts' forecast of $5.17 billion. Additionally, the adjusted profit came in at $37.62 per share, compared to the expected $28.90 per share.

BKNG maintains an optimistic outlook concerning future prospects, anticipating a record-breaking summer travel season for the third quarter as the demand for travel persistently follows a positive trajectory. A report from the International Air Transport Association (IATA) aligns with this perspective, showing that August's total traffic escalated by 28.4% in comparison to August 2022.

Considering these factors, it could be sensible to invest in BKNG shares. The company is poised to disclose its third-quarter results on November 2, and its recent financial trends should provide a promising justification for such investments.

Analyzing BKNG's Financial Performance: Highlighting Growth and Efficiency from 2020 to 2023

The trailing-12-month net income of BKNG has seen a substantial growth trend and some seasonal fluctuation over the reported period. Here are the key details:

• BKNG's net income on December 31, 2020, was $59 million.
• After an initial rise to $703 million in March 2021, there was a momentary dip to $414 million (June 2021), followed by a slight decrease to $382 million in September 2021.
• A notable upturn is seen from December 2021, when net income reached $1.165 billion again, demonstrating a remarkable improvement from the previous quarters.
• In 2022, there was a brief dip to $520 million by the end of March, but it rebounded quickly to $1.544 billion, $2.441 billion, and finally $3.058 billion by the end of the year.
• This growth trajectory continued into 2023 with a whopping net income of $4.024 billion recorded in March and $4.457 billion by the end of June.

From the first reported value of $59 million in December 2020 to the last reported value of $4.457 billion in June 2023, BKNG's net income has grown at an impressive rate, illustrating the company's strong financial performance during this period.

The trailing-12-month revenue of BKNG has demonstrated significant growth over the past several years. The analysis and trends are summarized as follows:

• The year 2020 ended with BKNG reporting a revenue of $6.8 billion (December 31, 2020).
• At the start of 2021, there was a dip in the revenue to $5.6 billion (March 31, 2021). Despite this slight decrease, the company achieved a significant recovery by the second quarter, with the revenue surging to $7.2 billion (June 30, 2021).
• From September 2021 to December 2021, BKNG experienced a steady increase in its Revenue from $9.2 billion to $10.96 billion.
• This upward trend continued aggressively in 2022, with the revenue rising from $12.5 billion in March to $17.1 billion by the end of December.
• In the first half of 2023, BKNG's revenue further increased, reaching $18.2 billion by March and then $19.3 billion by June.

To illustrate the growth rate, the revenue rose from $6.8 billion on December 31, 2020, to $19.3 billion on June 30, 2023, representing an impressive increase. This consistent rise, especially the noticeable jumps from 2021, highlights the company's robust financial performance and strong market presence.

The data series represents the Return On Sales (ROS) of BKNG between December 31, 2020, and June 30, 2023.

• On December 31, 2020, BKNG recorded a ROS of 13.6%.
• There was a notable increase in the following quarter to 24.8% as of March 31, 2021. However, this was followed by a decrease to 15.8% by June 30, 2021, and then further to 13.6% by September 30, 2021.
• The last quarter of 2021 saw an increase to 16.4%, reflecting a modest turnaround from the previous quarter's downturn.
• Through 2022, BKNG's ROS fluctuated, beginning with a drop to 9.6% as of March 31, 2022, before picking up to 16.2% by June 30, 2022, and further to 22.5% by September 30, 2022.
• The year 2022 ended with the ROS at 25.2%, marking one of the higher points in this period.
• As of the first quarter of 2023, there was a significant growth where ROS jumped to 30.8%. This upward trend continued through the half-year point, with the ROS reaching 32.2% by June 30, 2023.

Overall, the ROS for BKNG increased by approximately 18.6 percentage points from 13.6% at the start of the period in December 2020 to 32.2% by the end of the period in June 2023. This represents a growth rate of ~136%.

However, it has experienced a series of fluctuations throughout the period, including periods of significant increases as well as dips. The most recent data from 2023 indicates a solid upward trend in ROS.

From the provided data, the trend of the Return On Assets (ROA) for BKNG presents an overall increasing gradient throughout the years from December 2020 to June 2023. Here is a summary based on the data supplied:

• Starting at a low ROA of 0.3% in December 2020, the percentage fluctuated throughout 2021, peaking at 3.2% in March before falling back to 1.6% by September. The year ended with a considerable leap to a 4.9% ROA, marking significant growth.
• This growth continued into 2022; despite another dip to 2.2% in March, the company recorded its peak ROA of the year at 10.5% in September. By December, the ROA had improved further to 13.0%, indicative of the company's improving profitability status.
• In 2023, there has been continued improvement, with the ROA standing at 16.6% by the end of March and rising to 18.0% by June.

Calculating from the first and last values, there is a remarkable increase in ROA from 0.3% to 18.0%, indicating consistent growth over time. This trend suggests that BKNG is becoming more efficient in converting the money it has invested in assets into net income.

Fluctuating Trends in BKNG Share Prices from May to October 2023

Analyzing the available data, a few significant trends can be observed in the share price of BKNG:

• Starting on May 5, 2023, the share price was $2,585.89. It showed a turbulent but generally upward trend through the end of August 2023.
• By May 19, 2023, there was an early peak recorded at $2,702.79. However, the price experienced a dip to $2,551.79 by June 2, 2023.
• The highest value recorded during this period was $3,207.90 on August 11, 2023. This was followed by a series of fluctuations, with the price tending to decrease overall after this peak.
• A substantial downward trend became more apparent in late September and October. By October 30, 2023, the price dropped to $2,788.25.

Taking these points into consideration, it can be inferred that the growth rate of BKNG's shares accelerated until mid-August 2023, reaching its peak value. Post this period, there was a consistent deceleration in the share's growth rate with a clear downward tendency.

The growth rate, while variable, seemed to lean more toward a decline as we approached the end of October 2023. Here is a chart of BKNG's price over the past 180 days.

Analyzing BKNG's Performance: Trends in Quality, Momentum and Sentiment Ratings

BKNG, which belongs to the Internet category of stocks with a total of 57 stocks, has maintained a consistent POWR Ratings Grade of B (Buy) from May 6, 2023, to October 31, 2023. Here is a more detailed breakdown of BKNG's rank within its category over the aforementioned months:

• May 6, 2023: Rank #12 in the 57-stock Internet category.
• May 13-20, 2023: Improved to rank #7 in the category.
• June 3-10, 2023: Held at rank #7 in the category, improving to rank #6 on June 10.
• July 1, 2023: Rank dropped to #9 in the category.
• August 9, 2023: Rank dropped further to #10 in the category.
• August 19-26, 2023: Rank continued to drop, hitting #11 in the category.
• September 16, 2023: Rank dropped to #13 in the category, marking a low point for the stock.
• September 23 - October 31, 2023: Rank recovered to consistent #11 in the category, improving to #10 as of October 31.

Thus, despite some fluctuations in ranking within its category, BKNG has managed to maintain a rather superior position overall with a stable POWR grade of B (Buy).

Based on the provided POWR Ratings data for BKNG, the three most noteworthy dimensions are Quality, Momentum, and Sentiment. Here is a summary of these three dimensions organized by month:

Quality (rating consistently at 100):

• May 2023, June 2023, July 2023, August 2023, September 2023, and October 2023 all had a rating of 100 for the Quality dimension.

Momentum (ratings ranging from 73 to 88):

• May 2023: Momentum score of 82.
• June 2023: Score increased to 87.
• July 2023: Further increased to 88.
• August 2023: Dropped slightly to 81.
• September 2023: Decreased again to 76.
• October 2023: Further decline to 73.

Sentiment (ratings ranging from 79 to 89):

• May 2023: Sentiment score of 84.
• June 2023: Score declined to 79.
• July 2023: Bounced back to 83.
• August 2023: Further increased to 89.
• September 2023: Slight decrease to 87.
• October 2023: Increased again to 89.

Overall, BKNG shows consistent excellence in Quality. In regards to Momentum and Sentiment, there are observable upward and downward trends over this period, which may be noteworthy. In Particular, Momentum shows a clear decreasing trend from July 2023 to October 2023. Sentiment, on the other hand, generally shows an increasing trend with minor fluctuations.

How does Booking Holdings Inc. (BKNG) Stack Up Against its Peers?

Other stocks in the Internet sector that may be worth considering are Yelp Inc. (YELP), Meta Platforms, Inc. (META), and Travelzoo (TZOO) - they have better POWR Ratings. Click here to explore more Internet stocks.

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BKNG shares were trading at $2,784.11 per share on Tuesday afternoon, down $4.14 (-0.15%). Year-to-date, BKNG has gained 38.15%, versus a 10.17% rise in the benchmark S&P 500 index during the same period.

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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