Intercontinental Hotels Group PLC
(IHG - Snapshot Report
) recently jumped to within striking distance of the multi-year high at $18.63 after rebounding from a key trend line that has been in play for the last 18 months. With rising estimates and an attractive valuation, this Zacks #1 rank stock looks like a solid momentum pick.
The last update on IHG's business came on August 10 when the company reported better than expected Q2 results.
Revenue for the period was up 6% from last year to $772 million. Earnings also came in strong at 16 cents per share.
The company saw some nice gains in the key hotel industry metric, with RevPar (rev/per available room) increasing 7.4% from last year.
IHG was also busy opening new hotels while closing under performers, adding a net 65 hotels with 9,982 rooms during the quarter. The company also signed deals to add another 130 hotels with 19,126 rooms, boosting its pipeline to 1,302 hotels with 197,431 rooms.
Growing Presence in China
IHG has also been pursuing growth in the hot Chinese economy, with 132 hotels opened and another 148 in the pipeline.
Although the company's cash position fell $61 million from last year to $48 million, its total debt fell $410 million to $1.027 billion. It's long-term debt-to-capital ratio is 84.5%, well ahead of the industry average of 99.5%.
We did see some movement in estimates off the good quarter, with the current year up 7 cents to 95 cents and the next-year estimate gaining 8 cents to $1.05, a 10% growth projection.
In spite of the recent gains, IHG still have value, trading with a forward P/E of 19X, a nice discount to the industry average of 21X.
On the chart, IHG recently rebounded from a key long-term trend line to move back within striking distance of the multi-year high at $18.63. The MACD below the chart is bullish too, with the short-term average trading ahead of the long-term average. Look for support from the trend line and short-term low on any weakness. Take a look below.
Read the July 20 IHG article here
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.