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Hilton (HLT) Down 3.2% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Hilton Worldwide Holdings Inc. (HLT - Free Report) . Shares have lost about 3.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is HLT due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Adjusted earnings per share of 54 cents outpaced the Zacks Consensus Estimate by 10 cents but decreased 22.9% year over year. Nonetheless, the bottom line came well ahead of the guided range of 41-45 cents. Total revenues of $2.28 billion also surpassed the consensus mark by $20 million and were up 23.9% from the year-ago quarter.
Notably, Hilton ended 2017 with total 2,257 hotels containing roughly 345,000 rooms across the globe. In the fourth quarter, the company opened 123 hotels containing 19,100 rooms, resulting in a net unit growth of 18,400 rooms.
Moreover, the company’s newest brands Canopy, Curio — A Collection, Home2 Suites, Tapestry Collection and Tru together contributed 20% to the room openings in 2017.
We note that improving economic indicators have been a blessing for the hotel industry as these have perked up leisure and business travel demand. Under such circumstances, aggressive expansion strategies, industry-leading loyalty program coupled with an asset-light business model bode well for Hilton.
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable revenue per available room (RevPAR) increased 3.8% (on a currency-neutral basis) higher than the guided range of 1% to 3%. The improvement was driven by growth in occupancy and average daily rate (ADR). Strength at the company’s international hotels also contributed to the increase.
RevPAR at comparable managed and franchised hotels increased 3.7% and 2.4%, respectively, in the fourth quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose $498 million, up 10% year over year. Furthermore, solid RevPAR growth and efficient cost control positively impacted EBITDA growth.
Cash, Debt and Share Repurchase
As of Dec 31, 2017, cash and cash equivalents balance was $670 million lower than $1.7 billion as of Dec 31, 2016. Long-term debt was $6.7 billion compared with $10.2 billion at the end of 2016. In the fourth quarter, the company repurchased 3.5 million shares of its common stock for roughly $266 million and an average price per share of $74.67.
First-Quarter 2018 Outlook
For the first quarter of 2018, adjusted earnings per share are anticipated to lie between 43 cents and 47 cents. The Zacks Consensus Estimate is pegged at 48 cents. Hilton projects system-wide RevPAR to witness a year-over-year increase of 1% to 3% on a comparable and currency-neutral basis. Adjusted EBITDA is envisioned in the $410-$430 million band. Also, the company expects management and franchise fee revenues to increase in the band of 8-10% year over year.
Full-Year 2018 View
For 2018, adjusted earnings per share are projected within $2.49-$2.60 cents. The Zacks Consensus Estimate is pegged at $2.52. System-wide RevPAR is anticipated to witness a year-over-year improvement of 1% to 3% on a comparable and currency-neutral basis. Meanwhile, adjusted EBITDA is expected in the range of $2.03-$2.08 billion, increasing at 6-9%.
Also, the company management and franchise fee revenues to increase in the band of 8-10% year over year. Net unit growth is anticipated to be approximately 6.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Hilton Worldwide Holdings Inc. Price and Consensus
At this time, HLT has a poor Growth Score of F, however its Momentum is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
HLT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Hilton (HLT) Down 3.2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hilton Worldwide Holdings Inc. (HLT - Free Report) . Shares have lost about 3.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is HLT due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hilton Q4 Earnings and Revenues Surpass Estimates
Hilton Worldwide Holdings reported better-than-expected fourth-quarter 2017 results.
Adjusted earnings per share of 54 cents outpaced the Zacks Consensus Estimate by 10 cents but decreased 22.9% year over year. Nonetheless, the bottom line came well ahead of the guided range of 41-45 cents. Total revenues of $2.28 billion also surpassed the consensus mark by $20 million and were up 23.9% from the year-ago quarter.
Notably, Hilton ended 2017 with total 2,257 hotels containing roughly 345,000 rooms across the globe. In the fourth quarter, the company opened 123 hotels containing 19,100 rooms, resulting in a net unit growth of 18,400 rooms.
Moreover, the company’s newest brands Canopy, Curio — A Collection, Home2 Suites, Tapestry Collection and Tru together contributed 20% to the room openings in 2017.
We note that improving economic indicators have been a blessing for the hotel industry as these have perked up leisure and business travel demand. Under such circumstances, aggressive expansion strategies, industry-leading loyalty program coupled with an asset-light business model bode well for Hilton.
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable revenue per available room (RevPAR) increased 3.8% (on a currency-neutral basis) higher than the guided range of 1% to 3%. The improvement was driven by growth in occupancy and average daily rate (ADR). Strength at the company’s international hotels also contributed to the increase.
RevPAR at comparable managed and franchised hotels increased 3.7% and 2.4%, respectively, in the fourth quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose $498 million, up 10% year over year. Furthermore, solid RevPAR growth and efficient cost control positively impacted EBITDA growth.
Cash, Debt and Share Repurchase
As of Dec 31, 2017, cash and cash equivalents balance was $670 million lower than $1.7 billion as of Dec 31, 2016. Long-term debt was $6.7 billion compared with $10.2 billion at the end of 2016. In the fourth quarter, the company repurchased 3.5 million shares of its common stock for roughly $266 million and an average price per share of $74.67.
First-Quarter 2018 Outlook
For the first quarter of 2018, adjusted earnings per share are anticipated to lie between 43 cents and 47 cents. The Zacks Consensus Estimate is pegged at 48 cents. Hilton projects system-wide RevPAR to witness a year-over-year increase of 1% to 3% on a comparable and currency-neutral basis. Adjusted EBITDA is envisioned in the $410-$430 million band. Also, the company expects management and franchise fee revenues to increase in the band of 8-10% year over year.
Full-Year 2018 View
For 2018, adjusted earnings per share are projected within $2.49-$2.60 cents. The Zacks Consensus Estimate is pegged at $2.52. System-wide RevPAR is anticipated to witness a year-over-year improvement of 1% to 3% on a comparable and currency-neutral basis. Meanwhile, adjusted EBITDA is expected in the range of $2.03-$2.08 billion, increasing at 6-9%.
Also, the company management and franchise fee revenues to increase in the band of 8-10% year over year. Net unit growth is anticipated to be approximately 6.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Hilton Worldwide Holdings Inc. Price and Consensus
Hilton Worldwide Holdings Inc. Price and Consensus | Hilton Worldwide Holdings Inc. Quote
VGM Scores
At this time, HLT has a poor Growth Score of F, however its Momentum is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
HLT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.