Is There Still Room for Booking Holdings Shares After 19% Gain in 2024?

Thinking about what to do with Booking Holdings stock right now? You’re not alone. The travel giant has seen its share price move significantly over the last several years, which leaves both seasoned investors and newcomers wondering if more upside is in store or if it’s time to take a pause. In just the past year, Booking Holdings is up nearly 19.2%, and the stock has soared more than 220% over five years. That is some major growth to digest, even for those used to the occasional market rollercoaster.

More recently, there’s been some ebb and flow. Shares are down 6.9% over the past month but still up 1.5% in the last week, reminding us that sentiment around travel and tech names can shift quickly. While no huge breaking headlines have rattled the core business lately, ongoing shifts in consumer travel demand and evolving global travel trends continue to shape how investors approach this stock.

When it comes to value, there’s plenty to consider. Booking Holdings currently lands a valuation score of 3 out of 6 on our checks for undervaluation. That means the company is undervalued in three out of six key metrics, a signal that there may still be opportunity, but also a few areas where caution is warranted. Next, we will break down the main valuation methods that matter most, and highlight an even sharper way to gauge whether Booking is truly undervalued in today’s market.

Booking Holdings delivered 19.2% returns over the last year. See how this stacks up to the rest of the Hospitality industry.

Approach 1: Booking Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its future cash flows and then “discounting” them, essentially adjusting them back to what they’re worth in today’s dollars. For Booking Holdings, this method relies on both near-term analyst forecasts and longer-term projections out to 2035.

Currently, Booking Holdings is generating free cash flow of $9.15 billion. Analyst estimates suggest a steady climb, with free cash flow expected to reach $12.53 billion by 2029. For the years beyond that, financial modelers at Simply Wall St extrapolate further, estimating Booking's free cash flow could rise to over $16.88 billion by 2035.

After crunching these numbers using the 2 Stage Free Cash Flow to Equity approach, the DCF model values Booking Holdings at approximately $6,886 per share. Compared to the stock’s current market price, this suggests Booking Holdings trades at a 25.3% discount to its estimated intrinsic value. In other words, right now the stock appears undervalued by a significant margin.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Booking Holdings.

Our Discounted Cash Flow (DCF) analysis suggests Booking Holdings is undervalued by 25.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Booking Holdings Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to valuation tool, especially for profitable companies like Booking Holdings. Since it compares the market price of a stock to its actual earnings, the PE ratio offers a clear, at-a-glance sense of how much investors are willing to pay for each dollar of profit. Growth expectations and risk both play a big part here, as companies expected to grow faster or deliver more stable results typically command higher PE ratios than those with uncertain prospects.

Currently, Booking Holdings is trading at a PE ratio of 34.7x. For context, the average PE among global peers is 30.2x, and the broader hospitality industry sits lower at about 23.9x. That means the market is paying a premium for Booking relative to its sector and similar companies, but part of that premium reflects confidence in the company’s track record and future prospects.

To get a truer sense of value, Simply Wall St calculates a "Fair Ratio" for each company by accounting for not just growth, but also factors like profit margins, market cap, risk profile, and industry characteristics. For Booking Holdings, the Fair Ratio comes in at 38.8x. By considering these company-specific drivers alongside broader market trends, the Fair Ratio gives a much more tailored and relevant benchmark than simply comparing Booking Holdings to industry or peer averages alone.

When we stack the Fair Ratio against Booking’s current PE, the difference is small, just about 4x below the fair mark. In this context, Booking Holdings is valued close to what would be considered reasonable given all its underlying strengths and risks.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Booking Holdings Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal “story” about a company. It connects your assumptions about Booking Holdings’ future revenue, earnings, and profit margins to an estimated fair value. It’s more than just numbers; it helps you map your beliefs about growth, risks, and catalysts into an investment thesis you can visualize and track over time.

Narratives make the valuation process accessible to everyone, letting you see how a change in the company’s story, such as new technology, partnerships, or market challenges, directly impacts its fair value. On Simply Wall St’s Community page, investors are already using Narratives to compare their views and see whether the current share price presents a buying opportunity or suggests caution based on their personal outlook.

Best of all, Narratives update automatically with new news, earnings, or forecasts, so your analysis stays fresh and relevant. For example, some investors bullish on Booking’s AI partnerships see fair value as high as $7,218 per share, while more cautious views focused on travel headwinds put it closer to $5,200 per share. With Narratives, you can make smarter, up-to-date buy or sell decisions that truly reflect your perspective.

Do you think there's more to the story for Booking Holdings? Create your own Narrative to let the Community know!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com