Priceline PCLN is slated to report first quarter earnings results on May 4 after the bell. The company has been in the news recently because its CEO Darren Huston resigned recently following an internal investigation on his personal conduct with a female employee. One would have thought that such news would lead to investor concern about the company’s future given the competitive and dynamic market scenario. But the company assured us that there were suitable people to take over his roles (former CEO and current Chairman Jeffery Boyd as interim CEO of Priceline.com and Gillian Tans as CEO of Booking.com). Another factor (and perhaps the more significant one) was Expedia’s strong results that made investors optimistic about Priceline’s results as well. To see if the optimism is justified, let’s take a quick look at how it has been doing recently. Quarter Four Highlights In the last quarter, Priceline beat the Zacks Consensus Estimate on both the top and bottom lines. It exceeded its own (albeit conservative) guidance on revenue, bookings, EBITDA and earnings. Currency continued to pressure results since most of the business is generated overseas. But the company grew ADR, revenue and margins regardless (after adjusting for seasonality). The relatively benign oil prices had a positive impact on consumer discretionary spending. Also, air tickets were cheaper as a result, another incentive for people to spend on air travel. For the first quarter, Priceline estimated that room night bookings would grow 20-27% and total gross bookings would grow 12-19% year over year (18-25% on a local currency basis). Gross profit dollars were expected to increase 14-21% (20-27% on a constant currency basis), with the adjusted EBITDA at $580 million to $620 million. The pro forma EPS was expected to be $9.00-$9.60, based on a 16% tax rate and 50.5 million shares. The GAAP EPS was expected to be $6.90 to $7.50. The Industry Is Attractive The U.S. Commerce Department estimates international travel to the U.S. will grow at a CAGR of 3.1% from 2015 to 2020. Visitor volume is expected to grow from 0.4% in 2015 to 2.6% this year. Inbound travel volumes from Mexico, China, Canada and the UK will be the highest during this period. Moreover, market research data indicates that prices are rising across the world, with the biggest increases in Central/South America and the Middle East/Africa. Since it is a major international player, these trends play into Priceline’s sweetspot. What Do the Numbers Say? The company has topped estimates in each of the last four quarters at an average rate of 4.81%. Not just that, the company hasn’t missed estimates in any quarter since 2012, which is a very big deal and seems to indicate that this quarter will be no different. But the Zacks methodology indicates that caution may be in order. According to Zacks, a company with a Buy (Zacks Rank #1 or #2) or Hold rating (Zacks Rank #3) will have a good chance of beating estimates if it also has a positive ESP. Sell-rated stocks (Zacks Ranks #4 and #5) are best avoided. Priceline satisfies neither of the criteria since it has a Zacks Rank #4 (Sell) and ESP 0.00. Hence it’s difficult to predict a positive surprise. Besides, valuation looks rich, which could mean limited upward movement in response to results. Priceline’s price chart shows that a positive surprise hasn’t always led to an upward movement in share prices, So this is another reason for caution. Summing Up Priceline belongs in an attractive industry and has a strong international presence, which is particularly positive for business although it means that FX is always an important factor. The company has a solid history of positive surprises and this quarter may not be different. However, given its Zacks Rank #2 and rich valuation it is difficult to recommend the shares at this point. Safer bets would be Travelport Worldwide TVPT, which has a Zacks Rank #1 or Mercadolibre MELI, which has a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRICELINE.COM (PCLN): Free Stock Analysis Report MERCADOLIBRE IN (MELI): Free Stock Analysis Report TRAVELPORT WWD (TVPT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research