Booking Holdings Inc. (NASDAQ:BKNG) is slated to report third-quarter 2018 earnings on Nov 5, after the closing bell. In the last reported quarter, the online travel company delivered a positive earnings surprise of 18.52%.
The surprise history has been impressive in Booking Holdings’ case. The company surpassed estimates in each of the trailing four quarters, with average positive surprise of 13.39%.
We observe that shares of Booking Holdings have gained 5.7% on a year-to-date basis, outperforming the industry’s growth of 0.5%.
Strong Agency Revenues to Drive International Results
Booking Holdings generates bulk of its revenues from international markets, wherein the agency model is more popular. This is reflected in the merchant/agency split of revenues, which was 20/73% in the second quarter.
In the second quarter, agency revenues increased 21.4% sequentially and 10% from the year-ago quarter. We expect agency revenues to increase in the to-be-reported quarter as well, driven by strength across all its platforms.
Agoda and Rental Cars to Boost Merchant Revenues
Merchant revenues are also expected to grow in the to-be-reported quarter, driven by strength across agoda.com and rentalcars.com. While agoda.com is likely to benefit from discounting in markets, rentalcars.com is expected to ride on continuous operational improvements.
In the second quarter, merchant revenues were up 34.8% sequentially and 42.5% year over year.
Strong Room Night Growth
Room night growth is expected to improve in the quarter to be reported, driven by diverse inventory and brand recognition that tend to balance out the macro uncertainties related to any market, as well as growing competition from local and international players.
In the last reported quarter, room nights volumes increased 12%. Also, rental car days increased 1% and airline tickets were up 5.3%.
For the soon-to-be-reported quarter, Booking Holdings expects room nights booked to grow 6-9% and total gross bookings to increase 3-6% year over year (5-8% on a constant currency basis). The company expects adjusted EBITDA in the range of $2,300-$2,360 million.
What Our Model Suggests
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Booking Holdings has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to deliver a positive earnings surprise in the upcoming releases:
AMETEK, Inc. (NYSE:AME) has an Earnings ESP of +0.71% and carries a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.
Generac Holdings Inc. (NYSE:GNRC) has an Earnings ESP of +3.19% and a Zacks Rank #1.
Analog Devices (NASDAQ:ADI) has an Earnings ESP of +1.75% and holds a Zacks Rank #3.
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Analog Devices, Inc. (ADI): Free Stock Analysis Report
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Booking Holdings Inc. (BKNG): Free Stock Analysis Report
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