Booking Holdings reported strong fourth-quarter financial results, but shares dropped because the stock price already reflected expectations for a strong performance. All that makes the stock ripe for more gains. 

Late last month, the online travel agency reported sales of $4.78 billion, compared with expectations for $4.71 billion. The top line grew 18% year over year, driven by strong growth in gross bookings—total bookings of hotels and flights before accounting for the cut of transactions that the company takes. 

Costs were higher than expected because some transaction-related expenses rose significantly. Still, the company saw minimal increases in noncash expenses. That, combined with a lower-than-expected tax rate, pushed earnings per share up 30% to $32, compared with the $29.68 analysts had expected. 

The stock is down about 11% to $3,478 since the Feb. 22 earnings report. The shares, which had run up 28% from when Barron’s recommended them in early October to the close of trading just before earnings, had already reflected much of the growth. 

But the earnings were strong. Not only is the company growing and increasing its presence in travel across the globe, but a flight-booking offering it added in 2020 has been successful thus far. The number of tickets booked rose about 50% year over year.

One contributing factor is that Bookings is a global platform with a particular focus on Europe. People planning international trips need flights as well as accommodations, giving the company an opportunity to sell plane tickets to people booking hotels. Competition with Expedia, its main rival, is limited because Expedia mostly focuses on the U.S.

The company continues to generate cash flow, so it was able to buy back $2.4 billion of stock during the quarter, further increasing EPS. Management also announced a new, small annual dividend. 

The best part of all is that management is optimistic. It issued a range of forecasts for bookings growth with a midpoint of 6%, a number that would have been slightly higher without the negative expected impact of a stronger U.S. dollar.

The conflict in the Middle East is also holding growth back—an indication that the business is capable of expanding even faster in more normal times. All that puts the company on a path to continue to generate double-digit growth in EPS, Evercore analyst Mark Mahaney wrote in a note just after the earnings. 

“So, we’ll buy this dip,” Mahaney said. “We continue to view BKNG as a classic GARP [growth at a reasonable price] stock.”