Travel website extraordinaire Booking Holdings (NASDAQ: BKNG) stock jumped 4.8% through 11:50 a.m. ET Thursday after thumping analyst forecasts for both sales and earnings last night.

Expected to earn $77.47 per share on $7.6 billion in sales for Q3 2024, Booking Holdings reported instead an $83.89-per-share profit (adjusted for one-time items) on just under $8 billion in sales.

Booking Holdings Q3 sales and earnings

Not all the news was great. Total sales at Booking Holdings grew 9% year over year, but net income held basically flat at $2.5 billion. And while Booking’s adjusted earnings exceeded expectations, its net income per share for the quarter was only $74.34 — less than a 7% increase year over year.

The entirety of the growth in Booking’s per-share earnings in Q3, therefore, came from stock buybacks, which reduced the share count by about 6%. (The opposite of share dilution, this phenomenon is called share concentration — where earnings are concentrated among fewer shares outstanding, resulting in better per-share earnings growth than overall growth in net income.)

Is Booking stock a buy?

Still that’s hardly “bad news.” In fact, I’d argue that Booking Holdings’ buying back of an undervalued stock, causing earnings per share to grow faster than they otherwise would, is a shareholder-friendly move.

More good news: Free cash flow year to date hit $7.2 billion. That’s up 26% from a year ago, and puts Booking on track for about $9.6 billion in free cash flow this year if it keeps on generating cash at its current rate — well ahead of the $7.5 billion that Wall Street currently forecasts for 2024.

With a $150 billion enterprise value, I calculate Booking stock may be as cheap as 15.6 times current-year free cash flow, which seems a fair price to pay for a stock with a 0.8% dividend yield and a long-term projected earnings growth rate of 15%.

Long story short: Booking Holdings stock is a buy.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings. The Motley Fool has a disclosure policy.