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Hilton (HLT) to Post Q3 Earnings: What Awaits the Stock?

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Hilton Worldwide Holdings Inc. (HLT - Free Report) is scheduled to report third-quarter 2021 results on Oct 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 64.7%.

Q3 Estimates

The Zacks Consensus Estimate for the third-quarter bottom line is pegged at 80 cents per share, indicating an improvement of 1,233.3% from 6 cents reported in the year-ago quarter.

For revenues, the consensus mark is pegged at $1,694 million, suggesting growth of 81.5% from the prior-year quarter’s figure.

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

Factors at Play

Hilton’s third-quarter 2021 performance is likely to have benefitted from a gradual increase in demand, new hotel openings, hotel conversions and new project developments. With restrictions being lifted and more people being vaccinated, Hilton’s business is likely to have picked up on strong leisure demand combined with improving business transient trends. This along with focus on enhanced partnerships and points' redemption offerings for its loyalty program — Hilton Honors — is likely to have aided the company’s performance in the third quarter.

Strong contributions across the company’s Base and other management fees, Incentive management fees and Owned and leased hotels are likely to get reflected in the third-quarter top line.

The Zacks Consensus Estimate for revenues from Base and other management fees is pegged at $56 million, indicating growth of 133.3% from $24 million reported in the prior-year quarter. Incentive management fees are currently projected at $27.5 million, indicating growth of 292.9% from $7 million in the year-ago quarter. Revenues from Owned and leased hotels are estimated at $168 million, indicating growth of 78.7% from $94 million in the year-ago quarter.

However, high operating and fixed costs stemming from the pandemic are likely to have hurt margins in the to-be-reported quarter. Although RevPAR and occupancy rate are likely to have improved sequentially, it is likely to remain well below the pre-pandemic level.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Hilton 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: Hilton has an Earnings ESP of -2.39%. 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 #3. 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:

Golden Entertainment, Inc. (GDEN - Free Report) sports a Zacks Rank #1 and has an Earnings ESP of +51.95%.

Choice Hotels International, Inc. (CHH - Free Report) has a Zacks Rank #2 and an Earnings ESP of +4.04%.

Accel Entertainment, Inc. (ACEL - Free Report) has a Zacks Rank #2 and an Earnings ESP of +20%.

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