Back to top

Image: Bigstock

Hilton's (HLT) Q4 Earnings & Revenues Top Estimates, Rise Y/Y

Read MoreHide Full Article

Hilton Worldwide Holdings Inc. (HLT - Free Report) reported fourth-quarter 2019 results, wherein both earnings and revenues came ahead of the Zacks Consensus Estimate. While the bottom line beat estimates for the sixth straight quarter, the top line marked its third successive positive surprise.

Management is impressed with its earnings and adjusted EBITDA performance in the fourth quarter and 2019. Notably, these metrics surpassed the higher end of the company guided range, thanks to Hilton’s sturdy business model and robust net unit improvement. The company, which introduced Tempo by Hilton in January 2020, remains encouraged about sustaining its solid momentum in 2020.

Q4 in Detail

Hilton’s adjusted earnings of $1.00 per share surpassed the consensus mark of 95 cents and improved 6.4% on a year-over-year basis. Further, it came above management’s forecasted range of 91-96 cents per share.

Revenues totaled $2,369 million, which surpassed the consensus mark of $2,337 million. Moreover, the reported figure improved 3.5% from the year-ago quarter. This could be attributable to continued unit expansion.

Notably, Hilton opened 143 hotels during the fourth quarter of 2019. It also achieved net unit growth of roughly 17,000 rooms.

As of Dec 31, 2019, Hilton's development pipeline comprised more than 2,570 hotels, with roughly 387,000 rooms across 116 countries and territories — including 35 countries and territories, where it currently does not have any running hotels. Moreover, 215,000 rooms in the development pipeline were located outside the United States and 193,000 were under construction.

RevPAR and Adjusted EBITDA

In the quarter under review, system-wide comparable revenue per available room (RevPAR) dipped 1% on a currency-neutral basis due to a decline in average daily rate (ADR). This came below management’s expectations of flat RevPAR in the quarter.  

During the quarter, management and franchise fee revenues jumped 5%, courtesy of new properties and higher licensing and other fees. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $586 million compared with $544 million in the prior-year quarter.

Cash, Debt and Share Repurchase

As of Dec 31, 2019, cash and cash equivalent balance amounted to $630 million. The company had $195 million outstanding under the $1.75-billion revolving credit facility. In the fourth quarter, the company repurchased 4.3 million shares of its common stock for roughly $443 million. Average price per share was $101.01. The company bought back 16.9 million shares for about $1.5 billion in 2019. Hilton has shares worth nearly $346 million remaining under its ongoing buyback program.

In December 2019, Hilton paid out a quarterly cash dividend of 15 cents per share on its common stock for $42 million. In February 2020, management authorized a regular quarterly dividend of 15 cents, to be paid out on or before Mar 31 to its shareholders of record as of the close of the business on Feb 28.

Q1 Outlook

For first-quarter 2020, the company anticipates adjusted earnings between 85 cents and 91 cents per share. The guidance stands above the current Zacks Consensus Estimate of 83 cents. Hilton projects system-wide RevPAR to be almost flat on a currency-neutral basis. Adjusted EBITDA is envisioned to be $520-$540 million. Moreover, the company anticipates management and franchise fee revenues to improve 3-5% year over year.

2020 View

For 2020, Hilton projects adjusted earnings of $4.08-$4.21 per share. The Zacks Consensus Estimate for the same is currently pegged at $4.16. System-wide comparable RevPAR growth is anticipated to be flat to up 1% on a currency-neutral basis. Meanwhile, adjusted EBITDA is expected to be $2,420-$2,470 million.

Additionally, the company anticipates an increase of 5-7% in management and franchise fee revenues on a year-over-year basis. It also anticipates net unit growth in a band of 6-7%.

Hilton, which shares space with Marriott (MAR - Free Report) , Choice Hotels International (CHH - Free Report) and Hyatt (H - Free Report) , currently has a Zacks Rank #3 (Hold). Shares of the company have surged close to 50% in a year, crushing the industry’s growth of 21.3%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>

Published in