Hyatt Hotels Corporation (H - Free Report) is scheduled to report fourth-quarter 2017 numbers on Feb 14, after market close.
Revenues are likely to grow in the to-be-reported quarter on an aggressive expansion strategy. However, earnings are likely to have been affected in the fourth quarter.
Notably, Hyatt’s shares have gained 35.5% in the past six months, outperforming the industry’s growth of 26.2%.
Earnings Likely to be Hurt
Estimates for fourth-quarter earnings is pegged at 19 cents, reflecting a 34.5% decline from a year ago. Estimates have been stable over the last 60 days, reflecting analysts’ concerns surrounding the stock’s upside potential.
The estimated earnings decline is perhaps due to an estimated comparable owned and leased margin contraction in the to-be-reported quarter. In the third quarter, comparable Owned and Leased hotels RevPAR declined 0.5% (down 1.1% at cc).
Revenues to Benefit From Continuous Expansion
The consensus estimate for fourth-quarter revenues is pegged at $1.11 billion, reflecting a 2% year-over-year increase. This growth is attributable to Hyatt’s continuous efforts toward expanding its brands globally and gaining market traction. Expansion in domestic and international markets is expected to drive the company’s RevPAR and add to the overall top line in the to-be-reported quarter.
Notably, courtesy of aggressive expansion efforts, the company’s hotel opening agreements have continually outpaced actual openings and this trend is expected to continue in the near future as well. The company has experienced net room growth between 6% and 7% for 10 consecutive quarters.
Our Quantitative Model Does Not Predict a Beat
Hyatt does not have the right combination of two main ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
Zacks ESP: The company has an Earnings ESP of -21.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hyatt has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Hyatt Hotels Corporation Price and EPS Surprise
Stocks to Consider
Here are a few stocks from the Consumer Discretionary sectorthat investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Hilton (HLT - Free Report) has an Earnings ESP of +0.13% and a Zacks Rank #2 (Buy). The company is slated to report its quarterly numbers on Feb 14.
Choice Hotels (CHH - Free Report) has an Earnings ESP of +1.84% and a Zacks Rank #1. The company is scheduled to report its quarterly numbers on Feb 20.
Adidas (ADDYY - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. The company is expected to report its quarterly numbers on Mar 14.
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