Reasonable Price-to-Earnings Ratio
Strong Gross Profit Margin
Healthy Net Profit Margin
Solid Liquidity Ratios
Strong Free Cash Flow
Strong Financial Performance
Innovation Through AI
Growing Direct Bookings
Connected Trip Vision
Expansion in Alternative Accommodations
High Price-to-Sales Ratio
Negative Price-to-Book Ratio
Negative Return on Equity
High Debt Levels
Dependency on Travel Market Recovery
Potential Competitive Threats
First Quarter Growth Headwinds
Challenges in Revenue Growth
Overall, Booking Holdings demonstrates strong business quality through its solid financial performance and innovative efforts in AI and alternative accommodations. However, it faces potential challenges from market competition and the cyclical nature of the travel industry. Future prospects are bolstered by a clear connected trip vision and ongoing growth strategies, though short-term headwinds may temper expectations.
Analysis Date: February 20, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$6851.74
Current Market Price: $4253.46
IV/P Ratio: 1.61x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
38.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for BKNG
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (24.07)
P/B ratio ≤ 1.5 (-35.22)
Current ratio ≥ 2.0 (1.31x)
Long-term debt < Net current assets (3.17x)
Margin of safety (38.0%)
BKNG does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The gross profit margin of 97.86% indicates the company retains a substantial portion of revenue after accounting for the cost of goods sold, showcasing effective cost management.
A net profit margin of 24.78% reflects strong profitability after all expenses, indicating the company effectively converts revenue into profit.
The return on equity of -1.47% is concerning as it suggests that the company is not effectively generating profit from its equity base.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
-147.04%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.85%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
97.86%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
24.78%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 1.31 and quick ratio of 1.31 indicate that the company is in a good position to meet its short-term liabilities with its short-term assets.
With a free cash flow per share of 238.84, the company generates ample cash after capital expenditures, which is a positive indicator for future growth or dividend payments.
The debt-to-equity ratio of -4.25 signifies a heavy reliance on debt financing, which could pose risks if the company faces downturns.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
-4.25x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.31x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Booking Holdings reported a strong finish to 2024 with room nights exceeding expectations by 5 percentage points, growing 13% year-over-year. This led to gross bookings growth of 17% and revenue growth of 14%, both exceeding prior guidance ranges.
The company is leveraging generative AI to enhance customer experience and operational efficiency, with specific initiatives like AI trip planners and personalized travel agents, which are expected to drive future growth.
Direct bookings increased to the mid-60s percentage of B2C room nights, indicating a growing customer loyalty and preference for Booking's platform.
The company noted that while they are confident in their growth, they remain subject to the cyclical nature of the travel industry, which can be unpredictable.
There are concerns regarding competition from emerging technologies and agentic platforms that could disrupt traditional booking models and impact market share.
Booking Holdings is making progress on its connected trip vision, which includes enhancing the travel booking experience by integrating various travel verticals. This could lead to increased customer satisfaction and retention.
The company continues to experience strong growth in alternative accommodations, with room night growth of 19% in Q4, indicating a successful strategy in diversifying offerings.
The company anticipates a slowdown in Q1 growth due to calendar effects and a less favorable comparison to last year’s results, which may impact short-term performance.
While the company is optimistic about AI's potential for revenue generation, there are indications that realizing noticeable impacts on revenue may take longer compared to cost efficiencies.