To The Moon

$Booking Holdings(BKNG)$

Booking Holdings (NASDAQ: BKNG) stands as a global powerhouse in travel technology, with brands like Booking.com, Priceline, Agoda, and Kayak defining the online travel landscape. In this deep dive, I’ll walk through my valuation of the company, its growth prospects, capital allocation discipline, and ultimately answer the pressing question: is Booking Holdings a buy, hold, or sell today?

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Before we jump in, a quick reminder: this is not individualized financial advice. What follows is simply my transparent approach to analyzing companies — the same process and tools I use for my own decisions.

Why Revisit Booking Holdings Now?

We last covered BKNG about a year ago, when travel stocks were still recovering from the pandemic slump. Since then, global travel demand has normalized, Booking’s earnings have rebounded, and the stock is back near pre-pandemic highs — making it worth a fresh look.

Several factors have put BKNG back on my watchlist:

• A high-margin, high-return-on-capital business model.

• Shareholder-friendly management with aggressive buybacks.

• A valuation in line with the market, despite superior fundamentals.

• Its cyclical nature — which means better entry points often emerge during downturns.

With that context, let’s apply my valuation framework and see where BKNG really stands today.

The “Time-Until-Payback” Valuation Approach

At the heart of my analysis is a concept I call Time Until Payback. This method estimates how many years it would take for an investor to recoup their purchase price — assuming they bought the whole business outright and collected its future earnings.

Why this approach? Rather than relying on surface-level metrics like P/E or price-to-sales, I want to see how long it truly takes for the company to earn back its value. That’s the mindset of an owner, not just a trader.

The two key inputs:

• Earnings Yield — the inverse of P/E. For a P/E of 25, the earnings yield is 4%.

• Earnings Growth Rate — the company’s realistic, long-term annual growth.

When you combine the two and compound over time, you get a clear sense of whether you’re paying a fair price for future earnings power.

Step One: Earnings Yield

At today’s price, BKNG trades around 25.3x trailing earnings, which equates to an earnings yield of roughly 3.95%. In plain terms, if you bought the whole company for $100, you’d “earn” about $3.95 in year one profits.

On its own, that’s not especially cheap — but it’s also not wildly expensive for a high-quality, high-margin business. The real question is: how fast can those earnings grow?

Step Two: Growth Rate

Many investors overestimate growth by extrapolating recent spikes. I prefer to look at long-term, full-cycle growth — smoothing out booms and busts.

COVID complicates this. The pandemic collapsed travel demand in 2020–2021 and caused a sharp earnings rebound in 2022–2023 — but those extremes aren’t sustainable indicators of the company’s underlying trajectory.

Looking at 2010–2019, and adjusting for the impact of share buybacks (to avoid overstating growth), my estimate of BKNG’s normalized, organic earnings growth going forward is 8.7% annually.

Scenario Analysis: How Sensitive Is Booking’s Valuation to Growth Assumptions?

To provide more clarity around potential investor outcomes, let’s lay out a simplified scenario table using the Time-Until-Payback model under different combinations of earnings yields and growth rates:

This shows that growth alone doesn’t make the valuation compelling — unless you either (1) assume a very bullish future or (2) get a cheaper entry point via a market correction. If BKNG traded down to a 16–17x P/E, it would enter the buy zone even under moderate growth expectations.

Peer Comparison: How Does BKNG Stack Up Against the Competition?

Insights:

• Airbnb has stronger brand equity among millennials and Gen Z, but it trades at a much higher multiple with more volatility.

• Expedia looks cheaper on a P/E basis but lacks Booking’s operating leverage and international dominance.

• Trip.com offers exposure to China’s travel boom but carries geopolitical and currency risk.

• Alphabet isn’t a travel stock, but its dominance in search ads means it profits as travel rebounds — without direct exposure to bookings or margin pressure.

Conclusion: Among OTAs, Booking offers the best balance of profitability, scale, and shareholder returns, even if it lacks the raw excitement of Airbnb’s growth narrative.

Share Buybacks: A Feature, Not the Whole Story

Booking has retired a staggering 36% of its outstanding shares over the past decade — one of the most aggressive buyback programs among tech-adjacent mega caps.

On the surface, buybacks look good: they increase EPS and return capital to shareholders. But they can also distort growth metrics if earnings-per-share improvements come more from shrinking the denominator than growing the numerator.

In BKNG’s case, most buybacks were done at fair valuations — neither exceptionally opportunistic nor destructive — so I view them as slightly positive overall. But I adjust my growth assumptions accordingly.

Time-Until-Payback: Base Case vs. Bull Case

Here’s what the model shows:

Scenario A: Base Case (Conservative)

• Earnings Yield: 3.95%

• Growth Rate: 8.7%

• Time Until Payback: ~14 years

This is roughly in line with the broader market today, where the S&P 500 has a similar payback horizon. So BKNG appears fairly valued, but with no substantial margin of safety.

Scenario B: Optimistic (Street Consensus)

• Growth Rate: 15%

• Time Until Payback: ~11 years

Under more optimistic assumptions, BKNG edges closer to my personal “buy zone,” which typically begins at a 9–10 year payback.

So, the question for investors is: do you trust Wall Street’s optimism, or do you prefer the buffer of a more conservative base case?

Financial Strength: A Quiet Advantage

BKNG also boasts a fortress-like balance sheet.

• Modest debt relative to earnings.

• Enterprise Value close to Market Cap, meaning low net leverage.

• High credit ratings from agencies, reflecting prudent financial management.

In an industry prone to cyclical downturns, this financial health is a real strength — and allows BKNG to weather economic shocks better than its peers.

What Would It Take for a Better Entry Point?

At current prices, BKNG sits above my preferred buy range — which I estimate at $3,000–$3,200/share, about 30–40% below today’s level. At that range, the stock would deliver a payback closer to 9–10 years, making it more compelling.

What could trigger such a pullback?

• A global recession that dampens travel demand.

• Geopolitical instability that disrupts international bookings.

• A broader valuation reset due to rising rates or a correction in tech-heavy indices.

Those are the kinds of dislocations long-term investors can use to accumulate shares in great businesses.

Summary Table: BKNG at a Glance

Investor Takeaways

Booking Holdings remains a best-in-class travel technology company with:

✅ Strong brand portfolio and global footprint.

✅ High margins and capital efficiency.

✅ Shareholder-friendly buybacks and disciplined capital allocation.

✅ Solid balance sheet for downturn resilience.

But at current valuations, it’s neither particularly cheap nor excessively priced. If you already own BKNG, I’d hold your position and stay patient. If you’re on the sidelines, consider setting a limit order closer to the $3,100 level and be prepared to act during market dislocations.

In short: Booking is a business worth owning — just not at this price. A quality compounder, worth owning — at the right price. Current stance: Hold. Add on dips. Buy aggressively below $3,200.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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