Priceline is Thumping Expedia and Orbitz – and Making Google Wealthier

Priceline.com (PCLN) is putting more distance between itself and its competitors even as the online travel company’s rate of growth inevitably slows.

Sure, Priceline beat expectations Monday in reporting a 66% jump in net income to $224.7 million on the back of a 35.5% gain in fourth-quarter revenue of $990.8 million. Gross bookings jumped about 52%.

But what really matters is how Priceline is outpacing the competition, quarter after quarter. Expedia (EXPE) saw gross bookings up 12% in the quarter, revenues rise a more mild 7% and a 1.4% drop in net income. Orbitz's (OWW) numbers are even weaker: a 3% drop in revenue, a 1% drop in gross bookings and a $46.5 million loss in the quarter. All companies' fourth quarters ended Dec. 31. With the seasonality drained out of revenue numbers, one sees Priceline leaving Orbitz and Expedia in the dust:

priceline.com Revenues TTM Chart

priceline.com Revenues TTM Chart by YCharts

And being rewarded for that rapid growth:

priceline.com Stock Chart

priceline.com Stock Chart by YCharts

But growth is becoming more costly. In the fourth quarter, the buying of important keyword searches drove Priceline’s online advertising expenses up 64% to $217.9 million, or 22% of revenues, up from 20.8% of revenue in the first nine months of 2011 and about 18% earlier in 2010. Nice for Google (GOOG).

While Priceline’s PE on a trailing basis is a pricey 30 or so, it becomes more reasonable when compared to its expected 2013 earnings of about $38 a share. At that level, the company is priced at about 16.6 times earnings compared to 10.8 for Expedia and 10.4 for Orbitz - more manageable in the face of continued strong earnings and revenue growth and an expanding market share.

Michael McHugh is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings, stock screener and portfolio strategies.

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