Back to top

Image: Bigstock

Hyatt Hotels Corporation (H) Hit a 52 Week High, Can the Run Continue?

Read MoreHide Full Article

Have you been paying attention to shares of Hyatt Hotels (H - Free Report) ? Shares have been on the move with the stock up 8.4% over the past month. The stock hit a new 52-week high of $119.75 in the previous session. Hyatt Hotels has gained 32.4% since the start of the year compared to the 9.6% move for the Zacks Consumer Discretionary sector and the 17% return for the Zacks Hotels and Motels industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 16, 2023, Hyatt Hotels reported EPS of $2.55 versus consensus estimate of $0.32 while it beat the consensus revenue estimate by 5.97%.

For the current fiscal year, Hyatt Hotels is expected to post earnings of $2.65 per share on $6.49 billion in revenues. This represents a 427.16% change in EPS on a 10.2% change in revenues. For the next fiscal year, the company is expected to earn $3.35 per share on $6.66 billion in revenues. This represents a year-over-year change of 26.53% and 2.52%, respectively.

Valuation Metrics

Hyatt Hotels may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Hyatt Hotels has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 45.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.8X. On a trailing cash flow basis, the stock currently trades at 27.5X versus its peer group's average of 16.8X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Hyatt Hotels currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Hyatt Hotels fits the bill. Thus, it seems as though Hyatt Hotels shares could have potential in the weeks and months to come.

How Does H Stack Up to the Competition?

Shares of H have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Playa Hotels & Resorts N.V. (PLYA - Free Report) . PLYA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of B.

Earnings were strong last quarter. Playa Hotels & Resorts N.V. beat our consensus estimate by 1,400%, and for the current fiscal year, PLYA is expected to post earnings of $0.49 per share on revenue of $908.52 million.

Shares of Playa Hotels & Resorts N.V. have gained 24.5% over the past month, and currently trade at a forward P/E of 19.2X and a P/CF of 9.23X.

The Hotels and Motels industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for H and PLYA, even beyond their own solid fundamental situation.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Hyatt Hotels Corporation (H) - free report >>

Playa Hotels & Resorts N.V. (PLYA) - free report >>

Published in