Booking Holdings Inc (BKNG)

Conclusion

Booking Holdings Inc (BKNG.US) operates online travel and restaurant reservation platforms, including Booking.com, Priceline, Agoda, KAYAK and OpenTable. On 2026-11-09 the share price was 163.49 USD, giving a market capitalisation of 121.6 billion USD.

The verdict is undervalued. The price-to-earnings ratio of 16.9 sits well below its ten-year median of 32.5, and enterprise value to EBITDA of 11.8 sits below its median of 19.6. The discounted cash flow gives 336.39 USD per share at a discount rate of 10.6%, and the fair value from historical multiples is 269.66 USD. The reverse DCF implies growth of 4.1% a year, while revenue grew at a five-year compound rate of 31.7%. The price therefore assumes far less growth than the company has delivered.

The strongest numbers are interest coverage of 9.1, net debt to EBITDA of 0.44 and an operating margin of 32.8%, against a ten-year median of 30.8%. The weakest are a current ratio of 1.11, a Piotroski score of 6 out of 9, and a next-year earnings estimate revised down by 0.7% over 90 days. The DCF also rests on a terminal value that makes up 54.9% of its result.

Financial health

The financial strength is green, held up by a net debt to EBITDA of 0.44, interest coverage of 9.1 and an Altman Z-score of 6.41. The current ratio of 1.11 and quick ratio of 1.04 are the only ratios that are less comfortable, and the current ratio is assessed as neutral. The debt to equity ratio is not available. The Altman model was designed for manufacturers, so its safe zone reading is only a rough guide for this travel business. The insolvency risk is low, about 1.8% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-12-31. Interest coverage of 9.1 means earnings cover interest costs comfortably. Negative shareholder equity is a feature of the balance sheet that reduces the weight of book-value ratios.

Earnings quality

The earnings quality is green, supported by free cash flow conversion of 128.7% over the last twelve months and 165.1% over five years, and by a Beneish M-score of -2.99, which is read as unlikely to signal manipulation. Stock-based compensation is 2.1% of revenue, and free cash flow after it is 8.64 billion USD. The share count fell at a compound rate of 4.5% over five years, which points to buybacks. The Piotroski score of 6 out of 9 is assessed as neutral. Booking beat earnings estimates in all 8 of the last quarters, with an average surprise of 10.6%. Estimate revisions are mixed: the current-year estimate changed by -0.4% over 90 days, and the next-year estimate by -0.7%, with five downward revisions against two upward in the last 30 days.

Profitability

The profitability is green. The operating margin is 32.8% against a ten-year median of 30.8%, and the net margin is 25.5% against a median of 20.0%. The gross margin is 80.5%. Operating margin stability is 47.4%, so margins move but stay within a wide band. The weighted cost of capital is 9.7%, but the return on invested capital is not available for the latest period, because the company does not report positive invested capital. The five-year median return on invested capital is 61.6%. Return on equity is not available. Negative equity makes it hard to read the usual split, and the 2025 DuPont inputs show a net margin of 20.1% and an asset turnover of 0.92.

Growth

The growth is green. Revenue grew at compound rates of 16.4% over three years, 31.7% over five years and 11.3% over ten years. Revenue rose in 9 of the 10 comparable years. Earnings per share grew at 29.4% over three years, 158.5% over five years and 12.8% over ten years, and free cash flow per share at 21.7% over three years and 17.2% over ten. The next-year earnings growth estimate is 18.1%. The five-year rate is far above the three-year and ten-year rates, so the longer-term picture is more modest than the five-year figure suggests.

Valuation

The valuation is green, based on a single signal: the verdict of undervalued, with a margin of safety of 85.4%. Today the price-to-earnings ratio is 16.9 against a median of 32.5, a discount of 47.9%. Enterprise value to EBITDA is 11.8 against 19.6, a discount of 40.1%. Price to free cash flow is 13.2 against 20.4, a discount of 35.4%, and price to sales is 4.3 against 6.9, a discount of 37.7%. The DCF gives 336.39 USD per share at a discount rate of 10.6%, assuming 18.1% growth near term and 2.5% in perpetuity. The fair value band runs from 242.42 to 363.63 USD, with a midpoint of 303.03 USD. The fair value from historical multiples is 269.66 USD. The reverse DCF implied growth of 4.1% is 27.6% below the five-year revenue growth rate. The dividend yield is 1.1%, and the dividend uses 13.9% of free cash flow. These figures are an order of magnitude built on fixed assumptions, not a price target.

Risks

A current ratio of 1.11 leaves a thin buffer against short-term obligations, and a fall in cash flow would make it tighter. The Piotroski score of 6 out of 9 and the downward estimate revisions suggest that analysts see less momentum ahead. A slowdown in bookings would hit the ten-year revenue growth rate of 11.3%, which is well below the five-year figure. The DCF's terminal value share of 54.9% means that a large part of the value depends on long-run assumptions. Several figures are not available: the return on invested capital, return on equity and debt to equity ratio. The analysis has no debt maturity schedule and no revenue split by segment, so it cannot tell how refinancing needs or individual businesses such as Agoda or KAYAK contribute to the result.