Booking Holdings Inc. (BKNG) — what is it worth?

On the four Ms, Booking Holdings Inc. earns 80 for management and 68 for moat. The management score rests on a return on invested capital of 50.8% and a gross margin of 100.0% — figures that describe a business turning capital into profit efficiently. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. The solid moat and exceptional management are not the same judgement, and the gap between them is where the argument about this business sits.

The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 32.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $270.49, a 10-CAP price of $125.13 and a payback time price of $197.53, with the value zone set at the highest of the three, $197.53. Today's price of $160.28 sits inside that zone.

A business scoring this well, trading inside its value zone, is the combination the framework exists to find — which is also the reason to check why the market disagrees. A margin of safety score of 84 describes the cushion, not the certainty.