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Priceline earnings
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Priceline Earnings Looking Good for Investors

Priceline.com (PCLN) has seen a big run in 2013, up about 50% vs. about 18.5% gains for the broader stock market.

And despite a crash-and-burn at fellow online travel stock Expedia (EXPE) after results just a few weeks ago, Priceline earnings coming up after the bell tonight should validate the stock’s run and perhaps push this pick even higher.

Expedia earnings were pretty ugly as EXPE missed expectations on both profits and revenue. But Priceline earnings could be significantly better, and looking at the divergence in stock prices, it’s important to remember that these similar companies do not have to (and often don’t) move in lockstep.

Bigger-picture, I think secular trends are working in favor of Priceline. A recovery in both U.S. consumer and business travel seems to be taking shape, and PCLN continues to see strong overseas growth. Previous Priceline earnings reports have indicated that international bookings continue to grow at a 30% to 40% clip year-over-year, and that trend should continue.

Wall Street is optimistic about Priceline earnings, too. A few weeks ago, Deutsche Bank reiterated its “buy” rating on PCLN with a target of $980 — about 6% upside from here; UBS also reiterated its “buy” rating with a target of $1,035 a share, or 12% upside, for Priceline in early July.

Priceline earnings could miss and shake things up, of course. But many have said for a while that Priceline has more potential than Expedia for investors. And if you remember, there are many other online travel properties that bear out the narrative of big growth — whether it be Orbitz (OWW) that is up a whopping 240% year-to-date or TripAdvisor (TRIP) that has soared 86% in 2013.

In fact, insider reports indicate that despite TripAdvisor being a spinoff of Expedia, greater visibility on the TRIP website’s meta-search results (that is, searches of travel search sites) should actually boost Priceline earnings this time around and perhaps give it an edge at the expense of EXPE. Meta-search is a big thing in e-commerce these days, because it keeps you involved in the revenue stream even if consumers want to ultimately open their wallets for a competitor, and TRIP has reportedly had a lot of missteps rolling out various meta-search algorithms and is leaving money on the table.

That would be a sad reality for Expedia investors, but a boon if that trend shows up in Priceline earnings.

Also, Priceline earnings should reflect strong growth in its own portal, Booking.com, which allows it to benefit from stronger ad spending in addition to bigger bookings.

This is all a long way of saying that investors shouldn’t believe Expedia’s miss will result in similar trouble for PCLN.

If anything, Priceline earnings might be all the better for it as it benefits from its competitors’ missteps.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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