Booking (BKNG): the best stock opportunity now

2026-06-12 · By Lubin Danilo, founder of Lubin Investment

Booking Holdings, the parent of Booking.com, earns the top score on my quality grid: strong growth, huge margins, heavy buybacks. It trades at about 15 times its free cash flow, neither cheap nor excessive. As global travel rebounds, here is why this stock is worth a look, and its risks.

• Quality score: 10/10 on my fundamental grid.
• Strong sales growth, around 22 % a year, rare at this size.
• Free cash flow margin of 30 %: a cash machine.
• Cash per share climbs about 33 % a year, fueled by huge buybacks.
• Mid valuation: about 15 times free cash flow, neither a gift nor excess.

Far more than Booking.com

Everyone knows Booking.com to book a hotel. Few realize there is an empire behind it: Booking Holdings, which also owns Priceline, Agoda, Kayak, and the restaurant reservation service OpenTable. It is by far the largest online travel agency in the world.

Its model is almost magical financially. Booking owns no hotel and no plane. It connects travelers with hosts and takes a commission along the way. No heavy assets, few fixed costs: nearly every extra euro of commission drops to cash. That explains margins few companies reach.

Why my grid gives it 10/10

My score out of 10 measures objective financial soundness: profitability, cash growth, margins, buybacks, debt. Booking excels everywhere. Its free cash flow margin reaches 30 %. Free cash flow is the money that truly remains once every bill is paid. Thirty percent means that out of 100 euros of sales, 30 end up as available cash.

Rarer still: despite its size, the company still grows about 22 % a year. And it buys back its own shares at a steady pace, nearly 6 % of the total each year. When the share count falls, each remaining share weighs more. That is why its cash per share grows even faster than its sales, around 33 % a year.

The angle of the moment: travel is back

The backdrop adds spice. International travel is regaining color, and Booking is best placed to benefit: more travelers, more bookings, more commissions. When an already dominant company rides a tailwind, volumes can surprise to the upside.

But that is also its risk. Travel is cyclical: it rises strongly in good times and contracts fast in a recession, geopolitical tension or health shock. Part of the current results reflects a recovery that will not last forever at this pace. Worth keeping in mind before projecting.

Is it the right price?

That is my second question, always separate from quality. To measure price, I look at P/FCF (price-to-free-cash-flow): the share price divided by annual free cash flow. Booking trades at about 15 times its free cash flow. That is neither cheap nor excessive. For a company growing 22 % with such margins, it is even rather reasonable given its quality.

The real debate is the durability of growth. If travel keeps rising, 15 times cash is a fair price for a leader. If the recovery fades, the multiple can contract. As always, a low or mid price is only attractive if the quality holds. That double read is what I wanted to do in seconds, so I coded it. See the detail on the Booking analysis page, the ranking of undervalued stocks and my methodology.

FAQ

What exactly does Booking Holdings own?

Booking.com, Priceline, Agoda, Kayak and OpenTable. It is the largest online travel agency in the world, present in hotels, flights, rentals and restaurant reservations.

Why are its margins so high?

Because Booking owns no hotel and no plane. It connects travelers with hosts for a commission, with no heavy assets. Nearly every extra commission drops to cash, hence a free cash flow margin near 30 %.

Is a P/FCF of 15 expensive?

It is a mid valuation, neither cheap nor excessive. For a company growing 22 % a year with such margins, it is rather reasonable given its quality, provided travel growth continues.

Should you buy Booking Holdings stock?

It depends on your view of how durable the travel recovery is and on your price discipline, since the sector is cyclical. This is not personalized investment advice, do your own research.

Voir l'analyse BKNG sur Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I have analyzed stocks through their fundamentals for several years and invest my own money with this method. I codified it into a tool that judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).