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Factors Setting the Tone for Hyatt's (H) Earnings in Q4

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Hyatt Hotels Corporation (H - Free Report) is scheduled to report fourth-quarter 2019 numbers on Feb 19, after the closing bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 42.3%. Notably, the bottom line surpassed analyst expectations in the trailing 15 quarters.

Which Way are Estimates Headed?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 20 cents, indicating a decline of 67.7% from the prior-year reported figure. The company’s earnings estimates have witnessed downward revisions over the past 60 days, reflecting analyst concern regarding the stock.

For revenues, the consensus mark stands at $1.18 billion, suggesting growth of 4% from the year-ago quarter.

Factors at Play

Unit growth strategy, robust loyalty program and increase in management, franchise, and other fees are likely to have benefited the company’s fourth-quarter performance. Moreover, increase in occupancy rate and average daily rate (ADR) is likely to have driven the company’s revenues in the quarter to be reported.

The Zacks Consensus Estimate for Management, franchise and other fees is pegged at $160 million, suggesting growth of 10.3% from the prior-year quarter. Moreover, the estimated figure indicates an improvement of 8.1% from $148 million reported in the previous quarter.

Hyatt has been steadily investing in various businesses via acquisitions and divestment of low-margin units.

However, lower demand — particularly in the United States and China — is likely to have weighed on the company’s fourth-quarter performance. Moreover, high expenses stemming from mergers and intense competition are expected to have affected margins. This, in turn, is likely to get reflected in the fourth-quarter top line.

Hyatt Hotels Corporation Price and EPS Surprise

What Does the Zacks Model Say

Our proven model does not conclusively predict 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. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hyatt has a Zacks Rank #3 and an Earnings ESP of -70.00%.

Stocks With Favorable Combination

Here are a few stocks from the Consumer Discretionary sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the fourth quarter:

WW International, Inc. (WW - Free Report) has an Earnings ESP of +15.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marriott Vacations Worldwide Corporation (VAC - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #3.

Melco Resorts & Entertainment Limited (MLCO - Free Report) has an Earnings ESP of +11.34% and a Zacks Rank #3.

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