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Hilton (HLT) Tops Q3 Earnings & Revenues, Lifts '17 View

Hilton Worldwide Holdings Inc. HLT reported better-than-expected third-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate.

In January 2017, Hilton completed the spin-offs of Park Hotels & Resorts, Inc. PK and Hilton Grand Vacations Inc. HGV resulting in three independent publicly-traded companies. On the same day, the company also affected the previously announced 1-for-3 reverse stock split.

Notably, all these changes are expected to make Hilton a fee-based, capital efficient and resilient business having enormous growth potential worldwide.

The company’s results take into account the effect to the spin-offs.

Earnings and Revenue Discussion

Adjusted earnings per share (EPS) of 56 cents per share surpassed the Zacks Consensus Estimate of 50 cents by 12%. Moreover, the bottom line soared 37% year over year primarily owing to higher revenues. Also, the same came above management’s guided range of 47 cents to 51 cents.

Total revenue of $2.35 billion rose 26.1% year over year and topped the Zacks Consensus Estimate of $2.27 billion by nearly 4%.

Inside the Headlines

In the third quarter, system-wide comparable revenue per available room (RevPAR) increased 1.3% on a currency neutral basis, driven by 0.5% growth in occupancy and 0.6% rise in average daily rate (ADR). Markedly, strength at the company’s international hotels drove the results. Management had projected system-wide RevPAR to be flat to up 2% on a comparable and currency-neutral basis for the quarter.

RevPAR at comparable managed and franchised hotels increased 1.1% in the quarter. Both occupancy rate and ADR witnessed a rise of 0.5% each.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $524 million, up 11% year over year. Adjusted EBITDA margins came in at 56.9%, up 170 basis points year over year.

Fourth-Quarter 2017 Outlook

Share-based metrics in Hilton's outlook for fourth-quarter and full-year 2017 do not include the effect of potential share repurchases.

For the fourth quarter, earnings per share are forecasted between 41 cents and 45 cents. The Zacks Consensus Estimate of 44 cents is pegged within the guided range.

Hilton projects system-wide RevPAR to witness a year-over-year increase of 1% to 3% on a comparable and currency-neutral basis. Meanwhile, adjusted EBITDA is anticipated in the range of $453-$473 million.

Also, the company expects management and franchise fee revenues to increase in the band of 8-10% year over year.

2017 View Lifted

Given solid third-quarter results, the company increased its full-year 2017 outlook.

For full-year 2017, Hilton now anticipates adjusted earnings in the band of $1.87 to $1.91 per share, up from the earlier guided range of $1.78–$1.85. The Zacks Consensus Estimate for 2017 is pegged at $1.83.

Additionally, the company increased its full-year 2017 EBITDA expectations and now projects the same to be in between $1,920 million and $1,940 million (earlier $1,880--$1,920 million).

In the meantime, the company continues to expect management and franchise fee revenues to increase between 8% and 10% in 2017.

System-wide RevPAR is still anticipated to be in the range of 1–3% on a comparable and currency-neutral basis.

2018 Guidance

Hilton expects system-wide RevPAR to witness a year-over-year increase of 1% to 3% on a comparable and currency-neutral basis in 2018.

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise

 

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise | Hilton Worldwide Holdings Inc. Quote

Currently, Hilton carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another hotel giant, Marriott International, Inc. MAR is scheduled to report its third-quarter 2017 numbers on Nov 7. The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 98 cents.

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Hilton Grand Vacations Inc. (HGV): Free Stock Analysis Report
 
Park Hotels & Resorts Inc. (PK): Free Stock Analysis Report
 
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