For Immediate Release
Chicago, IL – August 30, 2017 – Zacks Equity Research highlights China Lodging Group, Limited(NASDAQ:HTHT – Free Report)as the Bull of the Day Cinemark Holdings, Inc.(NYSE:CNK – Free Report)as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (NASDAQ:AAPL – Free Report) and Sony (NYSE:SNE – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
China Lodging Group, Limited(NASDAQ:HTHT – Free Report) is cashing in on the growing Chinese middle class that wants to travel. This Zacks Rank #1 (Strong Buy) is expected to see revenue grow in the double digits in 2017.
China Lodging operates and franchises 3,541 hotels, or 359,530 rooms, in 369 cities in China. It's a mid-cap company with a market cap of $7.75 billion.
It focuses on economy and midscale hotel segments including brands such as Hi Inn, HanTing Hotel, Elan Hotel, JI Hotel, Starway Hotel, Joya HOtel, CitiGo Hotel, VUE Hotel, Crystal Orange Hotel, Orange Hotel Select, Orange Hotel and Manxin Hotel.
Its business includes leased and owned, manachised and franchised models. Manachised properties means the company manages it through the on-site hotel managers it appoints and collects fees from franchisees. Under the franchise model, the company provides support and training, including reservations, to the hotels and collects fees but does not appoint on-site management.
Like many franchise models, the company has a set company-wide standard across all hotels so customers know what to expect from the brand.
China Lodging also directly owns and leases some hotels, which it operates.
Revenue Jumped 20.1% in the Second Quarter
On Aug 17, China Lodging reported its second quarter result. As it's a foreign company, it is lightly covered by the Street. Zacks only has data from one covering analyst which only provides full year earnings estimates.
But revenue jumped 20.1% to $293.4 million, above its previously announced guidance without the acquisition of Crystal Orange, which closed on May 25.
In the second quarter, it opened 272 hotels, including 72 leased hotels and 200 manachised and franchised hotels. These newly-opened hotels included the 140 hotels (69 leased and 71 manachised and franchised hotels) from Crystal Orange Hotel. It also closed 6 leased and 61 manachised and franchised hotels during the quarter.
The occupancy rate for all hotels was 90.1% in the second quarter, up from 85.2% in the year ago quarter and up from 83.9% in the first quarter of this year.
The sequential gain was mainly due to seasonality but the year-over-year gains was the result of strong travel demand and increasing popularity of the company's brands.
RevPAR, or revenue per available room, rose 14% year-over-year due to both higher ADR and occupancy.
Loyalty Program Driving Growth
As of June 30, the loyalty program had 88 million members, who contributed about 76% of room nights sold in the second quarter.
87% of room nights were sold through the company's own channels. However, strong leisure travel demand as well as the expansion of the company's newly launched midscale brands were attracting increasing bookings from third party channels.
Midscale and upscale hotel rooms contribute 24% and 57% of the hotels in operation and in the pipeline. It feels confident it can feed into the growing demand at those price levels.
Raised Full Year Net Revenue Growth Guidance
For the third quarter, China Lodging expects net revenue to grow between 30% and 34% year-over-year.
For the full year, which includes Crystal Orange, net revenue growth is expected to range 23% to 26%, with Crystal Orange contributing about 7.2%. Excluding Crystal Orange, it would be growth of 13%-16%.
Previous guidance, excluding Crystal Orange, had called for 10%-13%.
Full Year Estimates Jump
The estimates are bullish for China Lodging as 2017 has jumped to $3.19 from $2.14 in just the last 60 days. That's earnings growth of 82.3% as the company made only $1.75 in 2016.
The analyst is equally as bullish on 2018 as the Zacks Consensus has risen to $4.77 from $2.68 in the last 2 months. That's earnings growth of 49.5%.
The financial impact from the acquisition of Crystal Orange is expected to be negligible in 2017 and will start to contribute to the bottom line in 2018.
Cinemark Holdings, Inc.(NYSE:CNK – Free Report) is suffering after Hollywood delivered a lackluster summer movie season. This Zacks Rank #5 (Strong Sell) is expected to see a decline in earnings in 2017.
Cinemark is one of the largest movie theatre chains in the world. It operates 529 theatres with 5,926 screens in 41 US states, Brazil, Argentina and 13 other Latin American countries.
Met the Second Quarter Estimate
On Aug 4, Cinemark reported its second quarter results and met the Zacks Consensus of $0.44.
Revenue rose just 0.9% to $751.2 million from $744.4 million a year ago. Concession revenue per patron rose 8.9% to $3.78 and average ticket price increased 3.7% to $6.48.
Its box office results exceeded the North American industry and it saw record food and beverage per caps.
A lot depends on Hollywood, and its content, however. The summer box office ended on a downward note as the August films failed to catch on which resulted in one weekend being the lowest box office results in 16 years.
However, some big name films, including the next Star Wars installment, are slated to close out the year with a bang.
Estimates Lowered for 2017 and 2018
But analysts still see a tough time for the theatre chains due to competition from at home content providers like Netflix, STARZ and HBO.
3 estimates were lowered, with one being raised, for 2017 over the last month which pushed down the Zacks Consensus Estimate to $2.14 from $2.34 just 2 months ago.
That's an earnings decline of 4.6% compared to 2016 when the company made $2.24.
Earnings are expected to improve in 2018, with earnings growth of 9%, but the estimates have still been lowered over the last 2 months.
Shares Hit New 52-Week Lows
The shares have been weak in 2017.
They're down 15.4% year-to-date and are now hitting new 1-year lows.
Apple (AAPL - Free Report) Touches New All-Time High
After quickly recovering from a pre-market slump, shares of Apple (NASDAQ:AAPL – Free Report) touched a new intraday trading high on Tuesday. Ahead of what should prove to be a pivotal stretch in the company’s history, investors are clearly confident in Apple’s ability to deliver.
Apple shares opened about 0.85% lower today, but the stock was back in the green before morning trading hours were over. Around noon, shares touched an intraday peak of $162.96, a new all-time high.
The move higher comes as anticipation for the release of the company’s new iPhone is starting to reach a breaking point. According to the latest set of rumors, Apple will host its product announcement event on September 12 (also read: Will Apple Unveil iPhone 8 at its September Event?).
Apple typically holds an event sometime in September, and products are typically available as early as the next week. Of course, the iPhone 8 promises to be a massive device for Apple. The company is celebrating the tenth anniversary of its flagship smartphone, and investors have been looking forward to its release for the better part of 2017.
With today’s gains, Apple’s stock is now up nearly 38% year-to-date. The assumption that the iPhone 8 will be a homerun as inspired most of this bullish trading, but a new smartphone isn’t the only thing investors have been looking forward to this year.
Another major rollout on the horizon is an update to the company’s Apple TV device. A 4K-compatible version of the video streaming device is also expected to be announced at the September 12 event, and Apple is reportedly scrambling to sign deals with Hollywood studios for high-definition films in time for the unveiling.
On top of this, Apple also recently hired two former Sony (NYSE:SNE – Free Report) executives to lead its content team for Apple Music. According to reports, Apple is prepared to give this team a $1 billion budget for original TV shows and movies in 2018 (also read: Apple's Investment in Original Content to Boost Services).
In its most recent quarter, Apple posted earnings of $1.67 per share, beating the Zacks Consensus Estimate of $1.57. Part of the reason for this impressive beat was Apple’s remarkable growth in its Service division. Revenue in the company’s Services unit—which includes AppleCare, Apple Pay, and Apple Music—reached $7.3 billion, a quarterly record and up 22% from the year-ago quarter.
As for now, Apple remains a Zacks Rank #3 (Hold).
About the Bull and Bear of the Day
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