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Hyatt Hotels (H) Up 31.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have added about 31.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hyatt Hotels due for a pullback? 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.
Hyatt Q3 Earnings & Revenues Miss Estimates, Fall Y/Y
Hyatt reported dismal third-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined sharply on a year-over-year basis. Both the top and bottom lines missed the Zacks Consensus Estimate for the second straight quarter. The company’s results in the quarter were impacted by the coronavirus pandemic.
The company reported adjusted loss per share of $1.48, wider than the Zacks Consensus Estimate of a loss of $1.25. In the prior-year quarter, the company had reported adjusted earnings per share of 37 cents.
Quarterly revenues of $399 million missed the consensus mark of $449 million. The top line also declined 67.2% from the year-ago quarter.
Operating Highlights
Adjusted EBITDA plunged 129.9% to ($48) million. Moreover, adjusted EBITDA margin declined to (35%) in the third quarter against 26.9% growth in the year-ago quarter.
Segmental Details
Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.
Revenues at Owned and Leased Hotels totaled $80 million, down 81.4% from the year-ago quarter number. The sharp decline can primarily be attributed to the impact of coronavirus on comparable owned and leased hotels, and dispositions. Owned and leased hotels RevPAR declined 83.1% in the quarter. While ADR was down 13.1%, occupancy rate fell 60.5 percentage points during the third quarter. Meanwhile, adjusted EBITDA decreased 177.4% to ($56) million. At constant currency, the same declined 177.2%.
Revenues at Americas Management and Franchising amounted to $33 million, reflecting a decline of 73.7% and 73.5% from the year-ago figure and constant currency, respectively.
RevPAR for comparable Americas full-service hotels decreased 82.7%. While ADR declined 24.6%, occupancy rates fell 59.4 percentage points from the year-ago quarter number.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 57.8%. While ADR declined 24.8%, occupancy rates decreased 34.6 percentage points from the year-ago quarter number. Adjusted EBITDA fell 82.9% (as well as in constant currency) to $16 million.
Revenues at ASPAC Management and Franchising slumped 47.9% year over year (down 48.3% at constant currency) to $17 million.
RevPAR for comparable ASPAC full-service hotels declined 58.9%. While ADR declined 26.9%, occupancy rates fell 42.4 percentage points from the year-ago quarter.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 29.3%. Occupancy and ADR declined 9.9 percentage points and 17.3%, respectively, in the quarter under review. Adjusted EBITDA was down 58.2% (down 58.7% at constant currency) to $9 million.
Revenues at EAME/SW Asia Management and Franchising were down 75.2% to $5 million.
Comparable EAME/SW Asia full-service hotels’ RevPAR decreased 76.1% on account of the COVID-19 crisis. While ADR slumped 10.2%, occupancy rates declined 51.2 percentage points during the quarter. Adjusted EBITDA plunged 113.4% (down 113.8% at constant currency) to ($2) million.
Balance Sheet
As of Sep 30, 2020, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,778 million. The total debt was $2.241 million as of Sep 30, 2020.
The company ended the second quarter with 38,466,898 Class A and 62,696,948 Class B shares issued as well as outstanding. Notably, the company suspended all share repurchase activity effective Mar 3, 2020, and suspended its quarterly dividend through first-quarter 2021.
Other Business Updates
Hyatt continues to witness improvement in RevPAR across all regions. Comparable system-wide RevPAR more than doubled sequentially.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -25.99% due to these changes.
VGM Scores
At this time, Hyatt Hotels has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hyatt Hotels has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Hyatt Hotels (H) Up 31.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have added about 31.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hyatt Hotels due for a pullback? 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.
Hyatt Q3 Earnings & Revenues Miss Estimates, Fall Y/Y
Hyatt reported dismal third-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined sharply on a year-over-year basis. Both the top and bottom lines missed the Zacks Consensus Estimate for the second straight quarter. The company’s results in the quarter were impacted by the coronavirus pandemic.
The company reported adjusted loss per share of $1.48, wider than the Zacks Consensus Estimate of a loss of $1.25. In the prior-year quarter, the company had reported adjusted earnings per share of 37 cents.
Quarterly revenues of $399 million missed the consensus mark of $449 million. The top line also declined 67.2% from the year-ago quarter.
Operating Highlights
Adjusted EBITDA plunged 129.9% to ($48) million. Moreover, adjusted EBITDA margin declined to (35%) in the third quarter against 26.9% growth in the year-ago quarter.
Segmental Details
Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.
Revenues at Owned and Leased Hotels totaled $80 million, down 81.4% from the year-ago quarter number. The sharp decline can primarily be attributed to the impact of coronavirus on comparable owned and leased hotels, and dispositions. Owned and leased hotels RevPAR declined 83.1% in the quarter. While ADR was down 13.1%, occupancy rate fell 60.5 percentage points during the third quarter. Meanwhile, adjusted EBITDA decreased 177.4% to ($56) million. At constant currency, the same declined 177.2%.
Revenues at Americas Management and Franchising amounted to $33 million, reflecting a decline of 73.7% and 73.5% from the year-ago figure and constant currency, respectively.
RevPAR for comparable Americas full-service hotels decreased 82.7%. While ADR declined 24.6%, occupancy rates fell 59.4 percentage points from the year-ago quarter number.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 57.8%. While ADR declined 24.8%, occupancy rates decreased 34.6 percentage points from the year-ago quarter number. Adjusted EBITDA fell 82.9% (as well as in constant currency) to $16 million.
Revenues at ASPAC Management and Franchising slumped 47.9% year over year (down 48.3% at constant currency) to $17 million.
RevPAR for comparable ASPAC full-service hotels declined 58.9%. While ADR declined 26.9%, occupancy rates fell 42.4 percentage points from the year-ago quarter.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 29.3%. Occupancy and ADR declined 9.9 percentage points and 17.3%, respectively, in the quarter under review. Adjusted EBITDA was down 58.2% (down 58.7% at constant currency) to $9 million.
Revenues at EAME/SW Asia Management and Franchising were down 75.2% to $5 million.
Comparable EAME/SW Asia full-service hotels’ RevPAR decreased 76.1% on account of the COVID-19 crisis. While ADR slumped 10.2%, occupancy rates declined 51.2 percentage points during the quarter. Adjusted EBITDA plunged 113.4% (down 113.8% at constant currency) to ($2) million.
Balance Sheet
As of Sep 30, 2020, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,778 million. The total debt was $2.241 million as of Sep 30, 2020.
The company ended the second quarter with 38,466,898 Class A and 62,696,948 Class B shares issued as well as outstanding. Notably, the company suspended all share repurchase activity effective Mar 3, 2020, and suspended its quarterly dividend through first-quarter 2021.
Other Business Updates
Hyatt continues to witness improvement in RevPAR across all regions. Comparable system-wide RevPAR more than doubled sequentially.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -25.99% due to these changes.
VGM Scores
At this time, Hyatt Hotels has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hyatt Hotels has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.