Is Now a Good Time to Buy Booking Holdings Stock?
Key Points
Booking Holdings saw its revenue increase 8% year over year in the second quarter.
It's aggressively buying back shares, and that has improved its per-share earnings.
- 10 stocks we like better than Booking Holdings ›
The economic seas may be choppy at the moment, but that shouldn't stop investors from considering the travel giant Booking Holdings (NASDAQ: BKNG) for their portfolios. The company has made a strong case for itself through durability and capital discipline over the past few years.
Booking is facing headwinds, particularly as travel is affected by geopolitical challenges, rising competition, and inflationary pressures. Yet, there are plenty of reasons for optimism. Booking's second-quarter earnings were largely positive; the company beat estimates on revenue and reported a 15% increase in adjusted earnings per share year over year.
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The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin rose to 36% despite turbulence in travel due to the conflict in the Middle East. Booking showed investors that it is a resilient business capable of continued growth through genuinely tough times.
Image source: Getty Images.
Booking also had $3.6 billion in free cash flow in this latest quarter. The company has been continuously buying back shares, and management raised its cost-savings target. Booking Holdings is demonstrating to investors that it is an efficiently run business.
As far as the stock's valuation is concerned, Booking isn't inexpensive, but it is fairly priced. Both of the trailing and forward P/E ratios sit in the low 20s, while Booking's PEG ratio is slightly below 1. These indicate that its valuation is quite reasonable.
Booking's stock is relatively flat this year and has a dividend yield of approximately 0.8%. The dividend itself isn't anything to write home about, but the $0.42 quarterly cash payout has increased consistently over the past few years. Booking Holdings has built an operationally strong business that long-term investors shouldn't ignore.
Should you buy stock in Booking Holdings right now?
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings. The Motley Fool has a disclosure policy.
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