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Is Hilton (HLT) Likely to Disappoint This Earnings Season?
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Hilton Worldwide Holdings Inc. (HLT - Free Report) is scheduled to report third-quarter 2017 numbers on Oct 26, before the opening bell.
Last quarter, this leading global hospitality company pulled off a positive earnings surprise of 4%. In fact, the company outpaced/met earnings estimates in all of the trailing four quarters, with an average beat of 16.18%.
Hilton Worldwide Holdings Inc. Price and EPS Surprise
However, the Zacks Consensus Estimate for current-quarter earnings of 50 cents implies a year-over-year decline of nearly 28%. Revenues are pegged at $2.27 billion, 22.8% lower than the prior-year quarter figure.
Meanwhile, we note that shares of the company have underperformed its industry post the spin-offs of Park Hotels & Resorts, Inc. (PK - Free Report) and Hilton Grand Vacations Inc. (HGV - Free Report) from Hilton on Jan 4, 2017. While Hilton’s shares have gained 21.4%, the industry rallied 26.3% since the date.
Will the upcoming earnings release give a boost to Hilton’s stock? Well, this depends largely on whether the firm is able to post a beat in the third quarter.
Our proven model does not conclusively show an earnings beat for Hilton this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Hilton has an Earnings ESP of -0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hilton carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Likely to Affect Q3 Results
Hilton has been witnessing growth in its system-wide revenue per available room (RevPAR) over the past few quarters, primarily owing to better-than-expected transient demand and strong group performance. We expect the trend to have continued driving RevPAR in the to-be-reported quarter as well.
However, management projects system-wide RevPAR to be flat to up 2% in the to-be-reported quarter owing to an unfavorable calendar shift and the timing of Jewish holidays. Meanwhile, adjusted earnings per share are anticipated to be between 47 cents and 51 cents, while adjusted EBITDA is expected in the band of 490 million to $510 million.
Notably, the spin-offs in January 2017 have made Hilton a fee-based, capital efficient and resilient business, which should drive organic growth in the quarter.
Resultantly, Hilton expects third-quarter results to be buoyed by strong unit development and tremendous growth in loyalty program given its scale, size, industry-leading brands and commercial platform. Also, the company’s new brands that have been developed at minimal cost have been faring quite well and are expected to propel the quarter’s revenues.
Even so, Hilton’s international presence makes it vulnerable to lingering political uncertainties and economic downturns in certain parts of the world. We believe unfavorable currency translations might hurt the top line in the to-be-reported quarter as well.
Stocks That Warrant a Look
Here are some other stocks that you may want to consider as these have the right combination of elements to post earnings beat this quarter too.
Hyatt Hotels Corporation (H - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #3.
La Quinta Holdings Inc. has an Earnings ESP of +0.94% and a Zacks Rank of 3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Is Hilton (HLT) Likely to Disappoint This Earnings Season?
Hilton Worldwide Holdings Inc. (HLT - Free Report) is scheduled to report third-quarter 2017 numbers on Oct 26, before the opening bell.
Last quarter, this leading global hospitality company pulled off a positive earnings surprise of 4%. In fact, the company outpaced/met earnings estimates in all of the trailing four quarters, with an average beat of 16.18%.
Hilton Worldwide Holdings Inc. Price and EPS Surprise
Hilton Worldwide Holdings Inc. Price and EPS Surprise | Hilton Worldwide Holdings Inc. Quote
However, the Zacks Consensus Estimate for current-quarter earnings of 50 cents implies a year-over-year decline of nearly 28%. Revenues are pegged at $2.27 billion, 22.8% lower than the prior-year quarter figure.
Meanwhile, we note that shares of the company have underperformed its industry post the spin-offs of Park Hotels & Resorts, Inc. (PK - Free Report) and Hilton Grand Vacations Inc. (HGV - Free Report) from Hilton on Jan 4, 2017. While Hilton’s shares have gained 21.4%, the industry rallied 26.3% since the date.
Will the upcoming earnings release give a boost to Hilton’s stock? Well, this depends largely on whether the firm is able to post a beat in the third quarter.
Our proven model does not conclusively show an earnings beat for Hilton this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Hilton has an Earnings ESP of -0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hilton carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Likely to Affect Q3 Results
Hilton has been witnessing growth in its system-wide revenue per available room (RevPAR) over the past few quarters, primarily owing to better-than-expected transient demand and strong group performance. We expect the trend to have continued driving RevPAR in the to-be-reported quarter as well.
However, management projects system-wide RevPAR to be flat to up 2% in the to-be-reported quarter owing to an unfavorable calendar shift and the timing of Jewish holidays. Meanwhile, adjusted earnings per share are anticipated to be between 47 cents and 51 cents, while adjusted EBITDA is expected in the band of 490 million to $510 million.
Notably, the spin-offs in January 2017 have made Hilton a fee-based, capital efficient and resilient business, which should drive organic growth in the quarter.
Resultantly, Hilton expects third-quarter results to be buoyed by strong unit development and tremendous growth in loyalty program given its scale, size, industry-leading brands and commercial platform. Also, the company’s new brands that have been developed at minimal cost have been faring quite well and are expected to propel the quarter’s revenues.
Even so, Hilton’s international presence makes it vulnerable to lingering political uncertainties and economic downturns in certain parts of the world. We believe unfavorable currency translations might hurt the top line in the to-be-reported quarter as well.
Stocks That Warrant a Look
Here are some other stocks that you may want to consider as these have the right combination of elements to post earnings beat this quarter too.
Choice Hotels International, Inc. (CHH - Free Report) has an Earnings ESP of +1.26% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hyatt Hotels Corporation (H - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #3.
La Quinta Holdings Inc. has an Earnings ESP of +0.94% and a Zacks Rank of 3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>