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Can Hyatt (H) Pull Off a Surprise This Earnings Season?

Hyatt Hotels Corporation H is scheduled to report third-quarter 2017 results on Nov 2, before the opening bell.

The company’s third-quarter results are expected to be positively impacted by its efforts to continue gaining market share globally on its solid brand portfolio, continuous expansion, and innovative and exceptional personalized service to guests.

Additionally, Hyatt is focusing on utilizing third-party distribution channels such as Booking.com and Expedia more effectively by implementing new initiatives intended to increase efficiency and flexibility, besides driving demand. Meanwhile, the company’s remodeled loyalty program is likely to aid in boosting occupancy.

Moreover, improved leisure and business travel demand as well as greater pricing power have been driving Revenue per Available Room (RevPAR) for the last few quarters. We expect the trend to have continued in the third quarter as well.

Further, our proven model shows that Hyatt has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat in this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is pegged at +3.32%. This is a major indicator of a likely positive earnings surprise.

Zacks Rank: Hyatt’s Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of an earnings beat.

Hyatt Hotels Corporation Price and EPS Surprise

However, negative currency translation is anticipated to reduce the value of overseas sales, given Hyatt’s significant international presence, thereby hurting revenues and profits in the to-be-reported quarter.

Also, lingering global uncertainty in certain economies, particularly the Middle East and Korea, is likely to limit revenue growth. Moreover, tough business conditions and recent terror assaults in key European cities have also affected tourism. Challenging market dynamics and ongoing renovations in France are expected to continue hurting revenues of the company too.

Management is also mindful of the headwinds they face with respect to close-in group bookings in the United States.

In the second-quarter conference call, management stated that third-quarter 2017 is anticipated to be relatively soft due to the shift in the timing of the Jewish holidays and a tough comparison at Rio property due to last summer’s Olympics. In fact, the quarter under review was expected to be the weakest quarter in 2017, with respect to both comparable system wide RevPAR growth and absolute adjusted EBITDA.

Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 17 cents per share, reflecting a decrease of 63.6% year over year. Meanwhile, the same for quarterly revenues is at $1.09 billion, a 0.5% improvement over the prior-year quarter’s reported figure.

Stocks That Warrant a Look

Here are some other stocks that you may want to consider as these have the right combination of elements to post earnings beat this quarter too.

Choice Hotels International, Inc. CHH has an Earnings ESP of +1.26% and a Zacks Rank #2 (Buy).

Marriott International, Inc. MAR has an Earnings ESP of +0.17% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Belmond Ltd. BEL has an Earnings ESP of +6.25% and a Zacks Rank #3.

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Marriott International (MAR): Free Stock Analysis Report
 
Hyatt Hotels Corporation (H): Free Stock Analysis Report
 
Choice Hotels International, Inc. (CHH): Free Stock Analysis Report
 
Belmond Ltd. (BEL): Free Stock Analysis Report
 
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