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Booking Holdings (BKNG) Up 0.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Booking Holdings (BKNG - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Booking Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Booking Holdings Report Loss in Q1

Booking Holdings reported a non-GAAP loss of $5.26 per share in first-quarter 2021, which was narrower than the Zacks Consensus Estimate for a loss of $7.26 per share. Further, the figure compares unfavorably with earnings per share of $3.77 in the year-ago quarter and a loss of 57 cents per share inthe previous quarter.

Revenues of $1.14 billion surpassed the Zacks Consensus Estimate of $1.12 billion. However, the top line declined 50% year over year and 7.8% sequentially.

The pandemic has continued to remain the biggest headwind in the reported quarter. The increasing number of COVID-19 cases worldwide, resulting in travel restrictions, hurt the performance of the company in the first quarter.

Booking Holdings witnessed a year-over-year decline of 15.1% in rental car in the reported quarter.

Additionally, the company witnessed sluggish agency, merchant, and advertising and other business revenues in the reported quarter.

Also, the booked room night number, which was 99 million in the first quarter, plunged 20.1% from the prior-year quarter.

Nevertheless, it witnessed a year-over-year improvement of 62.1% in the airline tickets unit in the reported quarter.

Notably, the pandemic remains a major headwind for the travel industry in the near term.

Nevertheless, the company’s highly variable cost structure and strong liquidity position are expected to help it navigate amid the crisis. Moreover, its solid cost-cutting initiatives are added positives.

Top Line in Detail

Booking Holdings generates the bulk of revenues from international markets, wherein, the agency model is more popular. This is reflected in the merchant/agency split of revenues, which were 32.7/62.8% in the first quarter (the previous quarter’s split was 30.4/65.4%)

Merchant revenues were $373 million, down 43.4% year over year.Further, Agency revenues were $717 million, down 49.6% on a year-over-year basis.

Advertising & Other revenues were $51 million (4.5% of total revenues), decreasing 75.1% from the year-ago quarter. These are non-inter-company revenues from Kayak and OpenTable.

Bookings

Booking Holdings’ overall gross bookings totaled$11.9 billion, down 3.7% year over year on a reported basis. Further, the figure was down 6% inconstant currency from the year-ago quarter.

Nevertheless, total gross bookings surpassed the Zacks Consensus Estimate of $10.3 billion.

Merchant bookings were $3.2 billion, down 20.7% from the prior-year quarter. Further, agency bookings rose4.6% year over year to $8.7 billion.

Operating Results

Adjusted EBITDA in the first quarter was a negative $195 million against $290 million in the prior-year quarter.

Per management, operating expenses were $1.4 billion, down 44.1% on a year-over-year basis.

Notably, the company generated an operating loss of $311 million compared with aloss of $309 million in the year-ago period.

Balance Sheet

As of Mar 31, 2021, cash and cash equivalents were$12.2 billion, down from $10.6 billion as of Dec 31, 2020.

Further, short-term investments amounted to $500 million in the reported quarter compared with $501 million in the previous quarter.

At the end of the first quarter, Booking Holdings had $9.9 billion of long-term debt, down from $11.03 billion at the end of the fourth quarter of 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -172.65% due to these changes.

VGM Scores

Currently, Booking Holdings has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Booking Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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