Time To Buy Booking Holdings Stock?

Forbes

05-05-2025

SYMBOL - 28 January 2025, Baden-Württemberg, Rottweil: The Booking.com application app for booking ... More travel accommodation, flights and rental cars can be seen on the display of an iPhone. Photo: Silas Stein/dpa (Photo by Silas Stein/picture alliance via Getty Images)
Booking Holdings (NASDAQ: BKNG) outperformed a sluggish market in 2025, with its stock increasing by 3% even as the S&P 500 experienced a 5% decline. The company disclosed robust Q1 results, reporting revenue that rose 8% year-over-year to $4.76 billion, surpassing the $4.59 billion estimate. Adjusted EPS soared by 22% to $24.81, well above the consensus of $17.45. Gross bookings and room nights each increased by 7%, while adjusted EBITDA expanded by 21% to $1.1 billion, propelled by global diversification and growth in alternative accommodations and flight reservations. Even during the typically slower quarter, Booking's international orientation—representing nearly 90% of revenue—provides insulation against U.S. macroeconomic challenges faced by competitors like Airbnb.
In spite of its elevated valuation, Booking Holdings (BKNG) appears to be appealing at its current price of approximately $5,100. The stock's solid fundamentals and limited downside risk render it an attractive investment prospect.
Our conclusion is drawn from comparing the current valuation of BKNG stock with its operational performance in recent years, along with its present and historical financial status. An analysis of BKNG across key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the company exhibits a very strong operating performance and financial health, as detailed below. Nevertheless, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieved returns exceeding 91% since its inception.
Based on the price you pay for each dollar of sales or profit, BKNG stock appears slightly overvalued relative to the broader market.
• Booking has a price-to-sales (P/S) ratio of 6.8 compared to 2.8 for the S&P 500
• Additionally, the company's price-to-free cash flow (P/FCF) ratio stands at 19.5 versus 17.6 for the S&P 500
• Moreover, it has a price-to-earnings (P/E) ratio of 31.7 compared to the benchmark's 24.5
Booking's Revenues have demonstrated significant growth in recent years.
• Booking's top line has increased at an average rate of 30.7% over the last 3 years (compared to a 6.2% rise for the S&P 500)
• Its revenues have risen 11.1% from $21 billion to $24 billion in the past 12 months (in contrast to a 5.3% increase for the S&P 500)
• Additionally, its quarterly revenues grew 7.7% to $4.8 billion in the most recent quarter from $4.4 billion one year earlier (against a 4.9% improvement for the S&P 500)
Booking's profit margins are significantly higher than those of most companies in the Trefis coverage universe.
• Booking's Operating Income over the previous four quarters was $7.6 billion, representing a high Operating Margin of 31.8% (compared to 13.1% for the S&P 500)
• Booking's Operating Cash Flow (OCF) during this time was $8.3 billion, indicating a high OCF Margin of 35.1% (versus 15.7% for the S&P 500)
• For the most recent four-quarter period, Booking's Net Income reached $5.5 billion – demonstrating a high Net Income Margin of 22.6% (relative to 11.3% for the S&P 500)
Booking's balance sheet appears very robust.
• Booking's Debt at the close of the latest quarter was $17 billion, while its market capitalization is $166 billion (as of 4/30/2025). This indicates a strong Debt-to-Equity Ratio of 10.5% (versus 21.5% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $16 billion of the $27 billion in Total Assets for Booking. This results in a very strong Cash-to-Assets Ratio of 59.3% (versus 15.0% for the S&P 500)
BKNG stock has experienced worse impacts than the benchmark S&P 500 index during some recent downturns. As investors remain hopeful for a soft landing by the U.S. economy, what could be the potential downside if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
• BKNG stock declined 37.2% from a peak of $2,616.41 on 18 February 2022 to $1,643.21 on 30 September 2022, compared to a peak-to-trough drop of 25.4% for the S&P 500
• The stock fully rebounded to its pre-Crisis peak by 2 May 2023
• Since then, the stock has risen to a high of $5,300.34 on 8 December 2024 and is currently priced at around $5,100
• BKNG stock plunged 44.8% from a peak of $2,086.90 on 10 January 2020 to $1,152.24 on 23 March 2020, contrasted with a peak-to-trough fall of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 9 November 2020
• BKNG stock decreased 66.3% from a high of $139.66 on 13 May 2008 to $47.07 on 6 November 2008, compared to a peak-to-trough drop of 56.8% for the S&P 500
• The stock fully regained its pre-Crisis peak by 10 August 2009
In conclusion, Booking's performance across the aforementioned parameters is summarized as follows:
• Growth: Very Strong
• Profitability: Very Strong
• Financial Stability: Extremely Strong
• Downturn Resilience: Weak
• Overall: Very Strong
Based on these metrics, we believe that the stock is attractive, reinforcing our stance that BKNG is a good stock to purchase.
Although BKNG stock shows promise, investing in a single stock carries risks. You might consider exploring the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a blend of the S&P 500, S&P mid-cap, and Russell 2000 indices) to yield strong returns for investors. Why is this the case? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has provided a responsive strategy to capitalize on favorable market conditions while minimizing losses when markets decline, as outlined in RV Portfolio performance metrics.