Booking Holdings (BKNG  ) shares were 5% lower following the company's Q4 earnings report which showed it topping estimates on the top and bottom-line. However, the stock was sold off following management's cautious commentary.

Despite this drop, Booking's shares have been performing well on an overall basis as it made new all-time highs earlier this month. Further, there is a lot of optimism about a big travel boom in the coming months that should be a rising tide for the entire sector.

Inside the Numbers

In Q4, Booking reported adjusted earnings of $15.83 a share and revenue of $3 billion. Both figures were above analysts' estimates of a $13.68 per share profit and $2.9 billion in revenue. Last year in the same quarter, it had a loss of $4.03 per share and revenue of $1.2 billion.

Booking is the leading online travel company in the world. Following the earnings release, shares were 3% higher but reversed following management's cautious commentary on "continued volatility" due to the coronavirus and the Russia-Ukraine crisis.

Overall, the report was positive and a clear improvement from the depths of the pandemic. It is also mirroring what other travel companies have been saying such as Expedia (EXPE  ). Already, hotel bookings are at pre-pandemic levels in the first half of February. Further, coronavirus causes continue to drop and mandates are being relaxed all over the world.

In 2021, Booking's overall revenue was about 60% higher than 2020 but 15% below its pre-pandemic levels. This largely tracks with other statistics showing that hotel occupancy rate and TSA checkpoints are also below pre-pandemic levels by a similar margin.

The bullish case for Booking rests on believing that travel will be strong in the coming months and that it will be able to capitalize. If both of those assumptions prove to be correct, then it has all the ingredients of a winning stock.

On a valuation basis, Booking is very reasonable with a forward P/E of 18 which is below the market average. This means it has the capacity for multiple expansion in addition to the earnings growth tailwind.