Booking Holdings (BKNG) stock is currently trading at a PE multiple of 21.83x. At its current multiple, the stock is trading at a discounted valuation to its peers Ctrip.com International (CTRP) and TripAdvisor (TRIP) and at a premium to Expedia (EXPE). Ctrip, TripAdvisor, and Expedia have PE multiples of 21.85x, 31.99x, and 22.05x, respectively.
Based on Wall Street’s earnings forecast for the next 12 months too, Booking Holdings is trading at a discount to most of its competitors. Booking Holdings, Ctrip, Trip Advisor, and Expedia have forward PE multiples of 18.42x, 25.96x, 27.51x, and 18.09x, respectively.
The PE ratio is the most commonly used multiple because of its simplicity, but it has some flaws. The earnings of a company can be distorted due to the debt component in its balance sheet, which can make the multiple meaningless. So, it is better to compare companies based on their EV-to-EBITDA (enterprise value-to-EBITDA) multiples also, as it neutralizes the effect of leverage in the company.
Currently, Booking Holdings has an EV-to-EBITDA multiple of 16.00x. The valuation multiple is significantly lower than its peers Ctrip and TripAdvisor, which have EV-to-EBITDA ratios of 40.10x and 22.39x, respectively. However, the stock’s EV-to-EBITDA multiple is higher than that of Expedia’s 12.15x.
Similarly, based on analysts’ EBITDA forecast for the next 12 months, Booking Holdings is trading at a hefty discount to Ctrip while at a premium to TripAdvisor and Expedia. Booking Holdings, Ctrip, Trip Advisor, and Expedia have forward EV-to-EBITDA multiples of 14.36x, 19.88x, 14.24x, and 9.60x, respectively.
In the year so far, shares of almost every major online travel agency (IYW) have been performing well except TripAdvisor. YTD, shares of Booking Holdings, Ctrip, Expedia, and TripAdvisor have gained 7.6%, 20.2%, 13.7%, and 0.8%, respectively.