BKNG

We rate Booking Holdings Inc. (BKNG) as a Reduce with a composite score of 40.6/100 at a current price of $4068.72. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (53th percentile) and stability (51th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (24th percentile) and investment (25th percentile) tempers our overall conviction. We assign a Wide Moat rating (79/100), Low uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Booking Holdings Inc. holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.6/100 places it at rank #3471 in our full 7,333-stock universe. With a $175.0B market capitalization, Booking Holdings Inc. operates at meaningful scale within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 54%, though momentum at the 24th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 90% (+34.9pp vs sector) narrow to operating margins of 33% (+15.9pp vs sector) and net margins of 20.5%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $4068.72, Booking Holdings Inc. is trading near fair value based on current fundamentals. Our value factor score of 53/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 20.2x (roughly in line with the sector median of 16.9x), EV/EBITDA of 14.2x (at a premium), P/S of 4.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to Booking Holdings Inc.. The company exhibits strong financial stability with a beta of 1.02, and a stability factor in the 51th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 51th percentile with quality at the 48th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 90% provide a buffer against cost pressures; large-cap scale ($175.0B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Booking Holdings Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-120.2%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Booking Holdings Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Booking Holdings Inc. receives a Reduce rating with a composite score of 40.6/100 (rank #3471 of 7,333). Our quantitative framework assigns a Wide Moat (79/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

Our analysis does not support a constructive view on Booking Holdings Inc. at this time. The combination of the current quantitative profile, low uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.