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Hilton Worldwide Holdings Inc. (HLT) Down 3.6% Since Last Earnings Report: Can It Rebound?
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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 3.6% 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 reported solid second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year.
Q2 in Detail
Hilton reported adjusted earnings per share (EPS) of $1.63, outpacing the Zacks Consensus Estimate of $1.57. In the prior-year quarter, the company reported an adjusted EPS of $1.29.
Quarterly revenues of $2,660 million surpassed the Zacks Consensus Estimate of $2,541 million and increased 18.8% from the year-ago quarter’s levels. During the quarter, franchise and licensing fees increased 13.4% year over year. Owned and leased hotels, base and other management fees and incentive management fees rose 13.4%, 12% and 50% year over year, respectively.
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable revenue per available room (RevPAR) grew 12.1% year over year (on a currency-neutral basis) owing to an increase in occupancy and average daily rate. Also, RevPAR was up 9.3% from 2019 levels.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the second quarter were $811 million, up 19.4% year over year. Our estimate for adjusted EBITDA was $784 million, up 15.5% year over year.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalent balance (including restricted cash) amounted to $883 million compared with $978 million reported in the previous quarter. HLT had long-term debt outstanding of $8.8 billion (sequentially flat), excluding deferred financing costs and discounts, with a weighted average interest rate of approximately 4.54%.
During the quarter, Hilton repurchased 3.3 million shares of its common stock worth approximately $470 million.
Management declared a quarterly cash dividend of 15 cents per share. The dividend will be payable on (or before) Sep 29, to shareholders of record as of Aug 25, 2023.
Business Updates
During second-quarter 2023, Hilton opened 92 new hotels. It also achieved net unit growth of nearly 11,200 rooms.
As of Jun 30, 2023, Hilton's development pipeline comprised nearly 3,060 hotels, with nearly 440,900 rooms across 116 countries and territories including 30 countries and territories where it currently has no running hotels.
Outlook
For third-quarter 2023, the company anticipates net income in the range of $395-$409 million. Adjusted EBITDA is expected to be between $790 million and $810 million. It projects third-quarter EPS (adjusted for special items) to be between $1.60 and $1.65.
For third-quarter 2023, management anticipates system-wide RevPAR to increase in the 4-6% band on a year-over-year basis.
For 2023, HLT estimates net income in the range of $1,387-$1,422 million. Earlier, it anticipated net income in the $1,331-$1,385 million band.
Adjusted EBITDA is expected to be between $2,975 million and $3,025 million. Previously adjusted EBITDA was suggested to lie between $2,875 million and $2,950 million. HLT continues to expect general and administrative expenses for 2023 in the range of $390-$410 million.
The company expects 2023 EPS (adjusted for special items) in the range of $5.93-$6.06 compared with the previous projection of $5.68-$5.88. Full-year capital return is anticipated to be between $2.4 billion and $2.6 billion, up from the previous expectation of $1.8-$2.2 billion.
The company anticipates 2023 system-wide RevPAR to increase between 10% and 12% year over year compared with the previous projection of 8% and 11%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Hilton Worldwide Holdings Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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Hilton Worldwide Holdings Inc. (HLT) Down 3.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Hilton Worldwide Holdings Inc. (HLT - Free Report) . Shares have lost about 3.6% 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 Q2 Earnings & Revenues Beat Estimates, Rise Y/Y
Hilton reported solid second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year.
Q2 in Detail
Hilton reported adjusted earnings per share (EPS) of $1.63, outpacing the Zacks Consensus Estimate of $1.57. In the prior-year quarter, the company reported an adjusted EPS of $1.29.
Quarterly revenues of $2,660 million surpassed the Zacks Consensus Estimate of $2,541 million and increased 18.8% from the year-ago quarter’s levels. During the quarter, franchise and licensing fees increased 13.4% year over year. Owned and leased hotels, base and other management fees and incentive management fees rose 13.4%, 12% and 50% year over year, respectively.
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable revenue per available room (RevPAR) grew 12.1% year over year (on a currency-neutral basis) owing to an increase in occupancy and average daily rate. Also, RevPAR was up 9.3% from 2019 levels.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the second quarter were $811 million, up 19.4% year over year. Our estimate for adjusted EBITDA was $784 million, up 15.5% year over year.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalent balance (including restricted cash) amounted to $883 million compared with $978 million reported in the previous quarter. HLT had long-term debt outstanding of $8.8 billion (sequentially flat), excluding deferred financing costs and discounts, with a weighted average interest rate of approximately 4.54%.
During the quarter, Hilton repurchased 3.3 million shares of its common stock worth approximately $470 million.
Management declared a quarterly cash dividend of 15 cents per share. The dividend will be payable on (or before) Sep 29, to shareholders of record as of Aug 25, 2023.
Business Updates
During second-quarter 2023, Hilton opened 92 new hotels. It also achieved net unit growth of nearly 11,200 rooms.
As of Jun 30, 2023, Hilton's development pipeline comprised nearly 3,060 hotels, with nearly 440,900 rooms across 116 countries and territories including 30 countries and territories where it currently has no running hotels.
Outlook
For third-quarter 2023, the company anticipates net income in the range of $395-$409 million. Adjusted EBITDA is expected to be between $790 million and $810 million. It projects third-quarter EPS (adjusted for special items) to be between $1.60 and $1.65.
For third-quarter 2023, management anticipates system-wide RevPAR to increase in the 4-6% band on a year-over-year basis.
For 2023, HLT estimates net income in the range of $1,387-$1,422 million. Earlier, it anticipated net income in the $1,331-$1,385 million band.
Adjusted EBITDA is expected to be between $2,975 million and $3,025 million. Previously adjusted EBITDA was suggested to lie between $2,875 million and $2,950 million. HLT continues to expect general and administrative expenses for 2023 in the range of $390-$410 million.
The company expects 2023 EPS (adjusted for special items) in the range of $5.93-$6.06 compared with the previous projection of $5.68-$5.88. Full-year capital return is anticipated to be between $2.4 billion and $2.6 billion, up from the previous expectation of $1.8-$2.2 billion.
The company anticipates 2023 system-wide RevPAR to increase between 10% and 12% year over year compared with the previous projection of 8% and 11%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Hilton Worldwide Holdings Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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.