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The Priceline Group (PCLN) is One Industry Leader that Could See Additional Growth - Barron's

June 5, 2015 11:39 AM EDT

The Priceline Group Inc. (Nasdaq: PCLN) is one investors should keep an eye on, according to Barron's.

Trading at 18 times FY16 earnings expectations, Priceline is the cheapest among online travel agent peers. Notably, the company hasn't missed earnings estimates in over five years and expectations call for 18 - 20 percent long-term earnings growth from the stock.

Yet, shares of Priceline are down around 8 percent over the last year as investors look toward a strong U.S. dollar and recent acquisitions by the company.

The biggest contributor to Priceline's top-line growth has been Booking.com, which accounted for $8.4 billion in revenue last year.

Priceline is also about to surpass the one-year mark following its acquisition of OpenTable in 2014 and CEO Darren Hutson is cautiously optimistic on Europe over the next year or so. The company remains a formidable contender in terms of size and reach, and has also implemented shareholder-friendly capital allocation initiatives recently. Along with traditional hotel reservations, PCLN is moving to implement more Airbnb-like features.

Negatives include a low barrier to entry for the OTA market and the fact that Priceline derives roughly 70 percent of its revenue from outside the U.S. (hence, the implication of a stronger dollar).

But, as the Fed moves to raise rates (whether it be this year or early next year), Priceline could see a pop on another inflow of business.

Shares of Priceline are down around 0.4 percent in late-morning trading Friday.



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