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Hyatt (H) Gears Up to Report Q2 Earnings: Factors to Consider
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Hyatt Hotels Corporation (H - Free Report) is scheduled to report second-quarter 2024 results on Aug 6 before the opening bell.
In the last quarter, the company’s adjusted earnings and revenues missed the Zacks Consensus Estimate by 2.7% and 0.4%, respectively.
H’s earnings topped the consensus mark in two of the trailing four quarters and missed on the remaining two occasions, the average surprise being 20.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter adjusted earnings per share (EPS) has trended upward to $1.29 from 94 cents in the past 30 days. The estimated figure indicates growth of 57.3% from the year-ago quarter’s adjusted EPS of 82 cents.
For revenues, the consensus mark is pegged at $1.76 billion, which indicates an increase of 3% from the year-ago quarter’s figure.
Factors at Play
Revenues
Hyatt’s top line is likely to increase year over year on the back of heightened leisure and business travel demand across the company’s customer segments. Leisure travel demand growth in Mexico and the Caribbean, accompanied by strong outbound travel from Greater China to markets including Japan, Thailand and South Korea, is likely to have aided the uptick. The increased travel demands are likely to have driven an increase in occupancy and average daily rate (“ADR”), thus fostering growth in comparable system-wide revenue per available room (RevPAR).
Our model expects comparable systemwide RevPAR to increase 5% year over year to $155.4. We expect ADR and occupancy rates, therefore, to increase 2.1% to $210.9 and 200 basis points to 73.7% year over year.
Furthermore, the company’s consistent focus on its World of Hyatt loyalty program, geographic expansion initiatives, inorganic growth strategies and an asset-light business model are likely to have added to the uptrend. During the quarter, global travel demand and net room growth are likely to have fueled fee generation for Hyatt.
We expect Base management fees, Incentive management fees and Franchise and Other fees to increase year over year by 11.8% to $107.3 million, 18.8% to $70.1 million and 8.4% to $100.8 million, respectively. We also anticipate total managed, franchised, and owned and leased properties to increase 5.1% year over year to 1,363.
Margins
The bottom line of Hyatt is likely to rise year over year on the back of increased gross fees, which include Base and Incentive management fees, and Franchise and other fees. Moreover, increases in Owned and leased, and Distribution revenues, along with other operational initiatives, are likely to have aided the uptick. The positive aspects are likely to have been partially offset by increased general and administrative expenses, due to higher payroll and related costs, marketing costs, and increased property enhancement expenses.
We expect total direct and general and administrative expenses to increase 3.3% year over year to $1.65 billion. Adjusted EBITDA is expected to increase 20.5% year over year to $328.9 million.
What Our Model Unveils
Our proven model predicts an earnings beat for Hyatt this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: H has an Earnings ESP of +48.96%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Here are some other stocks from the Zacks Consumer Discretionary space, which according to our model, have the right combination of elements to deliver an earnings beat this time around.
Madison Square Garden Sports Corp. (MSGS - Free Report) currently has an Earnings ESP of +203.00% and a Zacks Rank of 3.
MSGS’ earnings topped the Zacks Consensus Estimate in two of the last four quarters and missed on the remaining two occasions, the average negative surprise being 496.2%. Earnings for the second quarter are expected to increase 184.6% year over year.
Hilton Grand Vacations (HGV - Free Report) currently has an Earnings ESP of +16.12% and a Zacks Rank of 1.
HGV’s earnings for the second quarter are expected to increase 4.7%. The company reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 7.2%.
Choice Hotels International, Inc. (CHH - Free Report) currently has an Earnings ESP of +1.51% and a Zacks Rank of 2.
CHH’s earnings for the second quarter are expected to increase 6.9%. The company reported better-than-expected earnings in three of the last four quarters and missed on the remaining occasion, the average surprise being 4.6%.
Image: Bigstock
Hyatt (H) Gears Up to Report Q2 Earnings: Factors to Consider
Hyatt Hotels Corporation (H - Free Report) is scheduled to report second-quarter 2024 results on Aug 6 before the opening bell.
In the last quarter, the company’s adjusted earnings and revenues missed the Zacks Consensus Estimate by 2.7% and 0.4%, respectively.
H’s earnings topped the consensus mark in two of the trailing four quarters and missed on the remaining two occasions, the average surprise being 20.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter adjusted earnings per share (EPS) has trended upward to $1.29 from 94 cents in the past 30 days. The estimated figure indicates growth of 57.3% from the year-ago quarter’s adjusted EPS of 82 cents.
Hyatt Hotels Corporation Price and EPS Surprise
Hyatt Hotels Corporation price-eps-surprise | Hyatt Hotels Corporation Quote
For revenues, the consensus mark is pegged at $1.76 billion, which indicates an increase of 3% from the year-ago quarter’s figure.
Factors at Play
Revenues
Hyatt’s top line is likely to increase year over year on the back of heightened leisure and business travel demand across the company’s customer segments. Leisure travel demand growth in Mexico and the Caribbean, accompanied by strong outbound travel from Greater China to markets including Japan, Thailand and South Korea, is likely to have aided the uptick. The increased travel demands are likely to have driven an increase in occupancy and average daily rate (“ADR”), thus fostering growth in comparable system-wide revenue per available room (RevPAR).
Our model expects comparable systemwide RevPAR to increase 5% year over year to $155.4. We expect ADR and occupancy rates, therefore, to increase 2.1% to $210.9 and 200 basis points to 73.7% year over year.
Furthermore, the company’s consistent focus on its World of Hyatt loyalty program, geographic expansion initiatives, inorganic growth strategies and an asset-light business model are likely to have added to the uptrend. During the quarter, global travel demand and net room growth are likely to have fueled fee generation for Hyatt.
We expect Base management fees, Incentive management fees and Franchise and Other fees to increase year over year by 11.8% to $107.3 million, 18.8% to $70.1 million and 8.4% to $100.8 million, respectively. We also anticipate total managed, franchised, and owned and leased properties to increase 5.1% year over year to 1,363.
Margins
The bottom line of Hyatt is likely to rise year over year on the back of increased gross fees, which include Base and Incentive management fees, and Franchise and other fees. Moreover, increases in Owned and leased, and Distribution revenues, along with other operational initiatives, are likely to have aided the uptick. The positive aspects are likely to have been partially offset by increased general and administrative expenses, due to higher payroll and related costs, marketing costs, and increased property enhancement expenses.
We expect total direct and general and administrative expenses to increase 3.3% year over year to $1.65 billion. Adjusted EBITDA is expected to increase 20.5% year over year to $328.9 million.
What Our Model Unveils
Our proven model predicts an earnings beat for Hyatt this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: H has an Earnings ESP of +48.96%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With the Favorable Combination
Here are some other stocks from the Zacks Consumer Discretionary space, which according to our model, have the right combination of elements to deliver an earnings beat this time around.
Madison Square Garden Sports Corp. (MSGS - Free Report) currently has an Earnings ESP of +203.00% and a Zacks Rank of 3.
MSGS’ earnings topped the Zacks Consensus Estimate in two of the last four quarters and missed on the remaining two occasions, the average negative surprise being 496.2%. Earnings for the second quarter are expected to increase 184.6% year over year.
Hilton Grand Vacations (HGV - Free Report) currently has an Earnings ESP of +16.12% and a Zacks Rank of 1.
HGV’s earnings for the second quarter are expected to increase 4.7%. The company reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 7.2%.
Choice Hotels International, Inc. (CHH - Free Report) currently has an Earnings ESP of +1.51% and a Zacks Rank of 2.
CHH’s earnings for the second quarter are expected to increase 6.9%. The company reported better-than-expected earnings in three of the last four quarters and missed on the remaining occasion, the average surprise being 4.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.