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Hilton's (HLT) Q3 Earnings: Unit Expansion to Drive Growth
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Hilton Worldwide Holdings Inc. (HLT - Free Report) is slated to report third-quarter 2018 results on Oct 24, before the opening bell.
The company’s scale, size, commercial platform and industry-leading brands continue to drive unit growth. With the spin-off of a portfolio of hotels and resorts, as well as its timeshare business, Hilton transformed into a capital-light operating business. Meanwhile, the company’s industry-leading loyalty program continues to drive occupancy.
All these factors are expected to have driven Hilton’s top- and bottom-line growth in the third quarter.
However, challenging economic conditions in some key operating regions, along with stiff competition, have been hurting Hilton of late. The company’s shares have lost 0.4% in the past year compared with the industry’s decline of 16%.
Let us delve deeper into factors that are likely to have shaped Hilton’s third quarter.
Top Line to Gain From Solid Expansion Strategies
The Zacks Consensus Estimate pegs revenues of $2.41 billion for Hilton’s third quarter, suggesting 2.4% growth from the year-ago quarter. We believe that top-line growth is attributable to the company’s relentless expansion strategies.
In a bid to maintain its position as the fastest-growing global hospitality company, Hilton is continuing to drive unit growth. In the first quarter of 2018, the company achieved net unit growth of 7,100 rooms and witnessed a 7% increase from the prior-year quarter.
Further, during the second quarter, Hilton opened 123 hotels, taking room count to 17,100. The company achieved net unit growth of 15,800 rooms, indicating an 18% increase from the prior-year quarter.
For 2018, it projects approximately 6.5% net unit growth. It continues to have more rooms under construction in Europe, the Middle East and the Asia Pacific compared with any other hotel chain.
Moreover, strong demand for leisure travel has been driving Hilton’s revenue per available room (RevPAR). Subsequently, the consensus estimate predicts third-quarter RevPAR to grow 2.6% year over year. The company expects system-wide RevPAR to increase 2.5-3% year over year, on a comparable as well as a currency-neutral basis in the to-be-reported quarter.
Bottom Line to Grow
Hilton expects third-quarter adjusted earnings of 71-76 cents per share. The consensus estimate predicts earnings of 75 cents per share, reflecting 33.9% year-over-year growth.
We believe that earnings growth has been favored by the company’s capital-light business model. Further, consistent improvement in EBITDA margins has been favoring Hilton’s bottom-line growth.
What Does the Zacks Model Unveil?
Our proven model does not show that Hilton is likely to beat earnings estimates in third-quarter 2018. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hilton has an Earnings ESP of -1.18%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Hilton Worldwide Holdings Inc. Price and EPS Surprise
Malibu Boats (MBUU - Free Report) has an Earnings ESP of +3.64% and a Zacks Rank #1. The company is expected to report quarterly numbers on Nov 6.
MCBC Holdings (MCFT - Free Report) is scheduled to report quarterly results on Nov 8. The company flaunts a Zacks Rank #1 and has an Earnings ESP of +0.49%.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Hilton's (HLT) Q3 Earnings: Unit Expansion to Drive Growth
Hilton Worldwide Holdings Inc. (HLT - Free Report) is slated to report third-quarter 2018 results on Oct 24, before the opening bell.
The company’s scale, size, commercial platform and industry-leading brands continue to drive unit growth. With the spin-off of a portfolio of hotels and resorts, as well as its timeshare business, Hilton transformed into a capital-light operating business. Meanwhile, the company’s industry-leading loyalty program continues to drive occupancy.
All these factors are expected to have driven Hilton’s top- and bottom-line growth in the third quarter.
However, challenging economic conditions in some key operating regions, along with stiff competition, have been hurting Hilton of late. The company’s shares have lost 0.4% in the past year compared with the industry’s decline of 16%.
Let us delve deeper into factors that are likely to have shaped Hilton’s third quarter.
Top Line to Gain From Solid Expansion Strategies
The Zacks Consensus Estimate pegs revenues of $2.41 billion for Hilton’s third quarter, suggesting 2.4% growth from the year-ago quarter. We believe that top-line growth is attributable to the company’s relentless expansion strategies.
In a bid to maintain its position as the fastest-growing global hospitality company, Hilton is continuing to drive unit growth. In the first quarter of 2018, the company achieved net unit growth of 7,100 rooms and witnessed a 7% increase from the prior-year quarter.
Further, during the second quarter, Hilton opened 123 hotels, taking room count to 17,100. The company achieved net unit growth of 15,800 rooms, indicating an 18% increase from the prior-year quarter.
For 2018, it projects approximately 6.5% net unit growth. It continues to have more rooms under construction in Europe, the Middle East and the Asia Pacific compared with any other hotel chain.
Moreover, strong demand for leisure travel has been driving Hilton’s revenue per available room (RevPAR). Subsequently, the consensus estimate predicts third-quarter RevPAR to grow 2.6% year over year. The company expects system-wide RevPAR to increase 2.5-3% year over year, on a comparable as well as a currency-neutral basis in the to-be-reported quarter.
Bottom Line to Grow
Hilton expects third-quarter adjusted earnings of 71-76 cents per share. The consensus estimate predicts earnings of 75 cents per share, reflecting 33.9% year-over-year growth.
We believe that earnings growth has been favored by the company’s capital-light business model. Further, consistent improvement in EBITDA margins has been favoring Hilton’s bottom-line growth.
What Does the Zacks Model Unveil?
Our proven model does not show that Hilton is likely to beat earnings estimates in third-quarter 2018. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hilton has an Earnings ESP of -1.18%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Hilton Worldwide Holdings Inc. Price and EPS Surprise
Hilton Worldwide Holdings Inc. Price and EPS Surprise | Hilton Worldwide Holdings Inc. Quote
Stocks to Consider
Here are some companies from the Consumer Discretionary sector that are poised to record an earnings beat this quarter.
Acushnet Holdings (GOLF - Free Report) has an Earnings ESP of +28.57% and a Zacks Rank #3. The company is slated to report quarterly results on Nov 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Malibu Boats (MBUU - Free Report) has an Earnings ESP of +3.64% and a Zacks Rank #1. The company is expected to report quarterly numbers on Nov 6.
MCBC Holdings (MCFT - Free Report) is scheduled to report quarterly results on Nov 8. The company flaunts a Zacks Rank #1 and has an Earnings ESP of +0.49%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>