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Host Hotels (HST) Down 2.9% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Host Hotels (HST - Free Report) . Shares have lost about 2.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Host Hotels due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Host Hotels' Q4 FFO Beats Estimates, Revenues Up Y/Y
Host Hotels reported fourth-quarter 2018 adjusted FFO of 43 cents per share, which outpaced the Zacks Consensus Estimate of 41 cents. Adjusted FFO per share also increased from the year-ago tally of 42 cents.
The company generated total revenues of around $1.36 billion, which missed the Zacks Consensus Estimate of $1.37 billion, however inched up 1.3% year over year.
Results reflect improvements in room, as well as food and beverage revenues. The company also witnessed broad productivity gains that aided profitability.
Behind the Headlines
During the quarter under review, comparable hotel revenues were up 1.9% year over year to roughly $1.1 billion. Comparable hotel RevPAR (on a constant-dollar basis) was up 2.3% year over year, aided by a 2% increase in average room rate and an expansion of 20 basis points (bps) in occupancy. For domestic properties, comparable hotel RevPAR was up 2.3%, while the same for International properties climbed 3.2%.
For the Dec-end quarter, comparable hotel EBITDA increased 3.7%. Comparable hotel EBITDA margin advanced 45 bps.
Finally, the company exited fourth-quarter 2018 with around $1.54 billion of unrestricted cash, not including $213 million in the FF&E escrow reserve, and $945 million of available capacity under the revolver part of its credit facility. In addition, as of Dec 31, 2018, total debt was $3.8 billion, with average maturity of 4.2 years and average interest rate of 4.4%. Notably, the company has no debt maturities until 2020.
Host Hotels did not buy back any shares in 2018. It has $500 million of capacity available under its current repurchase program. Additionally, earlier the company entered into a distribution agreement through which it might issue and sell shares of common stock, having a total offering price of up to $500 million from time to time. So far this year, no shares have been issued under this agreement.
Portfolio Activity
Notably, during the reported quarter, Host Hotels made efforts to enhance its portfolio quality through strategic dispositions, aimed at lowering the company’s international and New York exposure. The company completed the sale of the 33% stake in its European joint venture to the company’s present partners, for $496 million. Further, this January, the company closed the sale of the Westin New York Grand Central, for $302 million, including FF&E funds.
In 2018, it completed more than $2.2 billion in asset sale. With these proceeds, the company has flexibility to add properties to its portfolio, invest in existing assets or go for share repurchases.
Capital Investments
During the Oct-Dec quarter, the company expended around $154 million on capital expenditures, of which $94 million was return on investment (ROI) capital projects, and $60 million for renewal and replacement projects.
Outlook
Host Hotels has provided its outlook for full-year 2019. The company expects 2019 adjusted FFO per share of $1.72-$1.81.
The company’s full-year projection includes comparable hotel RevPAR (constant U.S. dollar basis) growth of 0-2%. Additionally, the company projects capital expenditures of $550-$625 million for the year. This comprises $315-$350 million in ROI projects, and $235-$275 million in renewal and replacement projects.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Host Hotels has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Host Hotels has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Host Hotels (HST) Down 2.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Host Hotels (HST - Free Report) . Shares have lost about 2.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Host Hotels due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Host Hotels' Q4 FFO Beats Estimates, Revenues Up Y/Y
Host Hotels reported fourth-quarter 2018 adjusted FFO of 43 cents per share, which outpaced the Zacks Consensus Estimate of 41 cents. Adjusted FFO per share also increased from the year-ago tally of 42 cents.
The company generated total revenues of around $1.36 billion, which missed the Zacks Consensus Estimate of $1.37 billion, however inched up 1.3% year over year.
Results reflect improvements in room, as well as food and beverage revenues. The company also witnessed broad productivity gains that aided profitability.
Behind the Headlines
During the quarter under review, comparable hotel revenues were up 1.9% year over year to roughly $1.1 billion. Comparable hotel RevPAR (on a constant-dollar basis) was up 2.3% year over year, aided by a 2% increase in average room rate and an expansion of 20 basis points (bps) in occupancy. For domestic properties, comparable hotel RevPAR was up 2.3%, while the same for International properties climbed 3.2%.
For the Dec-end quarter, comparable hotel EBITDA increased 3.7%. Comparable hotel EBITDA margin advanced 45 bps.
Finally, the company exited fourth-quarter 2018 with around $1.54 billion of unrestricted cash, not including $213 million in the FF&E escrow reserve, and $945 million of available capacity under the revolver part of its credit facility. In addition, as of Dec 31, 2018, total debt was $3.8 billion, with average maturity of 4.2 years and average interest rate of 4.4%. Notably, the company has no debt maturities until 2020.
Host Hotels did not buy back any shares in 2018. It has $500 million of capacity available under its current repurchase program. Additionally, earlier the company entered into a distribution agreement through which it might issue and sell shares of common stock, having a total offering price of up to $500 million from time to time. So far this year, no shares have been issued under this agreement.
Portfolio Activity
Notably, during the reported quarter, Host Hotels made efforts to enhance its portfolio quality through strategic dispositions, aimed at lowering the company’s international and New York exposure. The company completed the sale of the 33% stake in its European joint venture to the company’s present partners, for $496 million. Further, this January, the company closed the sale of the Westin New York Grand Central, for $302 million, including FF&E funds.
In 2018, it completed more than $2.2 billion in asset sale. With these proceeds, the company has flexibility to add properties to its portfolio, invest in existing assets or go for share repurchases.
Capital Investments
During the Oct-Dec quarter, the company expended around $154 million on capital expenditures, of which $94 million was return on investment (ROI) capital projects, and $60 million for renewal and replacement projects.
Outlook
Host Hotels has provided its outlook for full-year 2019. The company expects 2019 adjusted FFO per share of $1.72-$1.81.
The company’s full-year projection includes comparable hotel RevPAR (constant U.S. dollar basis) growth of 0-2%. Additionally, the company projects capital expenditures of $550-$625 million for the year. This comprises $315-$350 million in ROI projects, and $235-$275 million in renewal and replacement projects.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Host Hotels has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Host Hotels has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.