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Factors Setting the Tone for Hyatt (H) This Earnings Season

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Hyatt Hotels Corporation (H - Free Report) is scheduled to report second-quarter 2020 results on Aug 3, after the closing bell.

In the last-reported quarter, the company reported adjusted loss per share of 35 cents, in line with the Zacks Consensus Estimate. Nonetheless, it has a trailing four-quarter earnings surprise of 64.6%, on an average.

How Are Estimates Faring?

The Zacks Consensus Estimate for second-quarter is pegged at a loss of $1.38, suggesting deterioration from earnings of 76 cents in the prior-year quarter. The company’s earnings estimates have witnessed downward revisions over the past 30 days, reflecting analyst concern regarding the stock.

For revenues, the consensus mark stands at $250.6 million, suggesting a decline of 80.6% from the year-ago quarter.

Let’s analyze the factors that are likely to make an impact this earnings season.

Hyatt Hotels Corporation Price and EPS Surprise

 

Hyatt Hotels Corporation Price and EPS Surprise

Hyatt Hotels Corporation price-eps-surprise | Hyatt Hotels Corporation Quote

Factors at Play

The coronavirus pandemic is likely to have negatively impacted Hyatt’s second-quarter performance. Although occupancy rates are improving in greater parts of China, rise in COVID-19 cases along with quarantines and travel restrictions across the world are likely to have affected the top line. Also, high operating costs stemming from the pandemic are likely to get reflected in the second-quarter results.

Notably, the Zacks Consensus Estimate for Management and franchise fees is pegged at $24.8 million, indicating a decline of 84.3% from $158 million reported in the previous quarter. The consensus mark for Owned and leased hotels revenues is currently pegged at $56 million, indicating a decline of 88.6% from $490 million in the year-ago quarter.

Nonetheless, increased focus on unit growth, financial flexibility and loyalty programs are likely to have aided the company’s performance in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Hyatt this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. But that's not the case here.

Earnings ESP: Hyatt has an Earnings ESP of +2.44%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Funko, Inc. (FNKO - Free Report) has a Zacks Rank #3 and an Earnings ESP of +10.96%.

Penn National Gaming, Inc. (PENN - Free Report) has a Zacks Rank #3 and an Earnings ESP of +3.13%

Activision Blizzard, Inc. (ATVI - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.31%.

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