Home Inns & Hotels Management, Inc.
) recently hit a new multi-year high as the industry recovers from a challenging 2009 on the back of a stronger global economy. With estimates on the upswing and a bullish growth projection, HMIN looks like a solid momentum player.
Home Inns & Hotels Management, Inc. develops and manages a chain of economy hotels in China. The company operates 674 hotels in 126 cities and has a market cap of $1.97 billion.
Our last update on Home Inn's business came in mid August when the company reported solid Q2 results that met expectations.
Revenue for the period was up 26% from last year to $119 million. Earnings were in line with expectations, coming in at 24 cents per share, dropping the company's average earnings surprise over the last four quarters to 19%.
The company was active building its portfolio during the quarter, opening 36 new franchised and managed hotels to push its total to 674. Its occupancy rates were also incredible, coming in at 96.4% from 92.4% last year.
RevPar (Revenue Per AVailable Room), a key hotel performance metric, was up 16% from last year.
Home Inns also used the good quarter to strengthen its balance sheet, with cash and equivalents up $44 million to $135 million, while its total debt fell $44 million to $27 million.
The solid quarter sent estimates soaring, with the current year gaining 57 cents to $1.51 and the next year adding 69 cents to $1.82, a bullish 21% growth projection.
In light, of the big gains of the last year, HMIN doesn't come cheap, trading with a forward P/E of 31X, a premium to its peer average of 21X.
HMIN recently hit a new multi-year high of $50.64 after rallying with the market in September. The stochastic below the chart is signaling that shares just rebounded from over-sold territory and remain well away from being over bought. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.