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Why Is Hilton Worldwide Holdings Inc. (HLT) Down 1.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Hilton Worldwide Holdings Inc. (HLT - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hilton Worldwide Holdings Inc. 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 reported fourth-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The top and bottom lines improved on a year-over-year basis. Global recovery from the COVID-19 pandemic and upward trend in travel and tourism contributed to the company’s performance.

During the year ended Dec 31, 2021, only about 360 hotels were closed, compared to approximately 1,280 hotels during the year ended Dec 31, 2020.

Q4 in Detail

Hilton reported adjusted earnings per share (EPS) of 72 cents, beating the Zacks Consensus Estimate of 71 cents. In the prior-year quarter, the company had reported an adjusted loss per share of 10 cents.

Quarterly revenues of $1,836 million beat the consensus mark of $1,708 million. The top line soared 106.3% from the year-ago quarter’s levels.

RevPAR and Adjusted EBITDA

In the quarter under review, system-wide comparable revenue per available room (RevPAR) surged 104.2% year over year (on a currency-neutral basis) owing to an increase in occupancy and average daily rate (ADR). Occupancy and ADR increased 20.7% and 84.1%, respectively, year over year. However, RevPAR is down 13.5% compared with 2019 levels.

During the quarter, fee revenues increased 91% year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the fourth quarter was $512 million compared with $204 million reported in the prior-year quarter.

Cash & Debt

As of Dec 31, 2021, cash and cash equivalent balance (inclusive of restricted cash) amounted to $1,512 million compared with $1,387 million in the previous quarter. The company reported long-term debt outstanding of $8.9 billion (flat sequentially), excluding deferred financing costs and discounts, with a weighted average interest rate of approximately 4%.

Business Updates

During fourth-quarter 2021, Hilton opened 94 new hotels. It achieved net unit growth of nearly 13,100 rooms.

As of Dec 31, 2021, Hilton's development pipeline comprised nearly 2,670 hotels, with nearly 408,000 rooms across 115 countries and territories — including 28 countries and territories where it currently does not have any running hotels. Moreover, 249,600 rooms in the development pipeline were located outside the United States, and 198,000 rooms were under construction. For 2022, the company expects net unit growth to be nearly 5%.

2021 Results

For 2021, the company reported adjusted earnings per share of $2.08. For full-year 2021, the company’s revenues were $5,788 million, up 34.4% year over year. In 2021, the company opened 414 new hotels totaling 67,100 rooms and achieved net unit growth of 55,100 rooms.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -19.87% due to these changes.

VGM Scores

At this time, Hilton Worldwide Holdings Inc. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 D. 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. Notably, Hilton Worldwide Holdings Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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