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Why Is Booking Holdings (BKNG) Down 4.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Booking Holdings (BKNG - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

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

Booking Holdings Q2 Earnings Beat Estimates

Booking Holdings reported non-GAAP earnings of $19.08 per share for second-quarter 2022, beating the Zacks Consensus Estimate by 8.2%. BKNG reported earnings of $3.90 and $2.55 per share in the prior quarter and the year-ago quarter, respectively.

Revenues of $4.29 billion missed the Zacks Consensus Estimate of $4.34. The top line surged 99% year over year on a reported basis and 116% on a constant-currency (cc) basis.

Improving travel demand and booking trends from the year-ago quarter’s readings were tailwinds. In the reported quarter, Booking.com witnessed growth in active customers owing to the increase in repeat customers and customers who made bookings on the platform after a year.

Booking Holdings witnessed growth of 22.4% in rental car on a year-over-year basis. BKNG also experienced 31.4% year-over-year growth in the airline tickets unit in the reported quarter.

Booked room night number, which was 246 million in the second quarter, surged 56.3% from the prior-year quarter’s level.

Booking Holdings witnessed strong growth across its agency, merchant, and advertising and other businesses in the reported quarter.

However, headwinds related to the coronavirus pandemic and macroeconomic uncertainties remain overhangs for BKNG.

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 was 41/54% in the second quarter (the previous quarter’s split was 39/54%)

Agency revenues were $2.3 billion, up 73.3% year over year. Merchant revenues skyrocketed 164.6% year over year to $1.7 billion.

Advertising & Other revenues of $244 million (accounting for 6% of total revenues) increased 42.7% from the year-ago quarter’s level.

Bookings

Booking Holdings’ overall gross bookings totaled $34.5 billion, which increased 57.3% on a reported and 73% on a cc basis from the respective year-ago quarter’s levels.

Total gross bookings surpassed the Zacks Consensus Estimate of $32.5 billion.

Merchant bookings were $15.1 billion, up 126.5% from the prior-year quarter’s level, while Agency bookings increased 27.2% year over year to $19.4 billion.

Merchant bookings beat the Zacks Consensus Estimate of $12.1 billion, whereas Agency bookings missed the consensus mark of $20.7 billion.

Operating Results

Adjusted EBITDA in the reported quarter was $1.09 billion compared with $48 million in the prior-year quarter. As a % of total revenues, the metric increased from 2.2% to 25.3%.

Per management, operating expenses were $3.3 billion, up 48.6% on a year-over-year basis. As a percentage of revenues, the figure contracted significantly to 76.7% from 102.6% in the year-ago quarter.

Booking Holdings generated an operating income of $1 billion against a loss of $56 million in the same quarter last year.

Balance Sheet

As of Jun 30, 2022, cash and cash equivalents were $11.8 billion, up from $10.5 billion as of Mar 31, 2022.

Account receivable amounted to $2.2 billion in the reported quarter compared with $1.6 billion in the previous quarter.

At the end of the second quarter, Booking Holdings had $8.2 billion of long-term debt compared with $8.4 billion at the end of the first quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -10% due to these changes.

VGM Scores

Currently, Booking Holdings has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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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