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Starwood (HOT) Lags Q2 Earnings and Revenue Estimates

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Starwood Hotels & Resorts Worldwide Inc. operates as a hotel and leisure company, globally.

Starwood has inked a definitive agreement to be acquired by Marriott International, Inc. (MAR - Free Report) , which will lead to the creation of the world's largest hotel company. We note that the merger is expected to close shortly.

Starwood's strong developmental pipeline, significant international exposure and asset disposition strategy have been helping it to record earnings growth in the past few quarters. Meanwhile, continual renovation of the Sheraton and Aloft brand has been aiding top-line growth.

However, lingering global uncertainty in economies like Europe, Brazil and China has been limiting revenue growth and hurting operating margins. Additionally, despite the weakening of the U.S. dollar in 2016, negative currency translation has been marring the company’s revenues and profits.

Investors should note that the consensus estimate for HOT has been moving slightly downwards over the last 60 days. Meanwhile, HOT’s earnings have been strong over the past few quarters. In fact, the company posted positive earnings surprises in all of the last four quarters, with an average beat of 12.41%. Revenues too outpaced the Zacks Consensus Estimate in three of the trailing four quarters.

STARWOOD HOTELS Price and EPS Surprise

STARWOOD HOTELS Price and EPS Surprise | STARWOOD HOTELS Quote

HOT currently has a Zacks Rank #4 (Sell) but that could change following Starwood’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: HOT misses on earnings. Our consensus earnings estimate called for earnings per share of 73 cents per share, and the company reported earnings of 71 cents per share. Investors should note that these figures take out stock option expenses.

Revenues: HOT reported revenues of $1.25 billion. This lagged our consensus estimate of $1.33 billion

Key Stats to Note: Worldwide System-wide REVPAR for same-store hotels increased 1.4% year over year in constant dollars. System-wide REVPAR for same-store hotels in North America increased 3.4% in constant dollars.

Worldwide same-store company-operated gross operating profit margins decreased 20 basis points year over year. Meanwhile, international gross operating profit margins for same-store company-operated properties also decreased roughly 55 bps. North American same-store company-operated gross operating profit margins, however, increased 15 basis points.

Stock Price Impact: In-active in pre-market trading.

Check back later for our full write up on this HOT earnings report later!

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