Priceline.com (Nasdaq: PCLN), which some investors would argue was the poster child for the internet bubble at the beginning of the decade and then was written off for dead by many, has roared back with a vengeance over the last few years.

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Priceline.com just reported third-quarter earnings that beat guidance and raised its outlook for the next quarter. The company earned $3.45 per share in the quarter after removing a $181.9 million non-cash tax benefit that boosted earnings, beating consensus estimates of $2.92 per share.

Priceline.com is now up more than 150% year to date on the back of strong earnings momentum. The company has reported an upside earnings surprise for each of the last four quarters. It has seen its earnings estimates for 2010 move up over the last 90 days from $8.56 to $9.19 per share. This was before the blowout quarter reported November 9, so the 2010 estimates are sure to be moved up as analysts adjust for the higher business activity guided to by the company. (Find out more about earnings surprises in Surprising Earnings Results.)

A Controversial Company
Priceline.com has always been a controversial stock, as skeptics questioned the extendability of its original business model, which called for travelers to bid for the idle inventory of airlines with a range of travel dates rather than a specific flight. Skeptics claimed that most travelers needed the certainty of a set travel date, and thus the addressable market would be limited.

The company has expanded beyond this, and it now earns revenue from what its calls "price disclosed" products including hotel rooms, airline tickets, cruises and other services. The company owns booking.com, a large European hotel reservation service. Ironically, booking.com maintains a network of 26 physical locations worldwide, so it appears that brick-and-mortar businesses haven't died just yet.

Although current investors in Priceline.com are no doubt ecstatic about the recent performance, those who bought back in 1999 still have a long way to go. The stock had a peak market capitalization of $22 billion in May 1999 during a quarter when revenues were reported at $49.4 million. The current market capitalization is around $8.5 billion.

In 2003, the stock price dipped so low that the company did a one-for-six reverse split to boost its share price.

Others Still Trading Far Below Peak Prices
Many other stocks that rode the technology and internet bubble back then are still trading far below its peak prices. This includes large cap stocks like Microsoft (Nasdaq: MSFT) and Cisco Systems (Nasdaq: CSCO), which are still considerably below those levels.

Amazon.com (Nasdaq: AMZN) is one of the few that has exceeded its technology bubble highs. The stock broke through after it reported strong earnings last month.

If anything, this proves the importance of examining valuation when analyzing a stock. Priceline.com currently trades at 22 times its 2010 earnings estimates.

Priceline.com does not operate in a vacuum, and the company does have competition. Expedia (Nasdaq: EXPE) and Orbitz Worldwide (NYSE: OWW) provide similar services in some areas.

Another competitor is Sabre Holdings, which owns travelocity.com. Sabre Holdings was taken private by two private equity firms in 2007, so look for an IPO issue in the near future.

Bottom Line
Priceline.com encountered the brutal weeding process that the market imposed on many of its peers back in the early part of this decade. The company has not only survived that hazing, but also prospered and rewarded recent investors with powerful earnings growth.

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