A Fresh Look at Booking Holdings (BKNG) Valuation After the New Ryanair Partnership Boost

Booking Holdings (BKNG) just inked a partnership with Ryanair that expands how customers of Booking.com, KAYAK, Priceline, and Agoda can search for and book flights. This event is catching the eye of investors because it allows travelers booking through Booking Holdings’ brands to easily access Ryanair’s extensive network. Added perks include full price transparency and direct updates, effectively eliminating what was previously extra hassle in the process. For a company rooted in making travel easier, this is a move that could drive more booking activity and unlock new revenue channels.

Looking at the bigger picture, Booking Holdings has already seen strong momentum over the past year, with total returns up 46% and a sharp year-to-date climb of 15%. Even as travel patterns have shifted, Booking Holdings has managed to grow revenues by 8% annually and deliver almost 19% growth in net income. These factors have steadily pushed the stock higher. The recent months have seen additional partnerships and platform improvements, fueling the long-term total return, which has more than doubled investors’ money over the past three years.

With shares riding high, the key question now is whether today’s market price reflects all future growth or if there is still value waiting to be unlocked. Is this partnership the catalyst for further upside, or are investors already paying up for it?

Most Popular Narrative: 7.3% Undervalued

According to community narrative, Booking Holdings appears to be undervalued by 7.3% based on analyst expectations for future earnings growth and margins.

*"Booking Holdings is incorporating AI technology across its platforms to improve operations, streamline traveler experiences, and enhance supplier partnerships. This is expected to drive future revenue growth and margin improvement. The company's focus on increasing alternative accommodations and expanding its Genius loyalty program aims to strengthen customer retention and capture a broader market, potentially boosting revenue and net margins."*

Want to discover the bold assumptions behind this bullish outlook? The story is packed with aggressive profit margin expansion, hefty earnings projections, and a valuation that relies on premium industry multiples. Curious about the numbers analysts use to build this narrative? Explore further to uncover the key drivers that could set Booking Holdings apart in the next few years.

Result: Fair Value of $6,094.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifts in global travel demand or rising marketing costs could quickly challenge even the most optimistic growth projections for Booking Holdings.

Find out about the key risks to this Booking Holdings narrative.

Another View: Market Comparison Raises Questions

While our DCF model points to value, a look at Booking Holdings’ price-to-earnings ratio tells a different story. Compared to the rest of the industry, shares currently look expensive. Could this be a warning sign?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Booking Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Booking Holdings Narrative

If you want to dig into the numbers and build a view that fits your own research, you can shape your own Booking Holdings analysis in just a few minutes. Do it your way.

A great starting point for your Booking Holdings research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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