Yahoo Finance Strong Leisure Demand & RevPAR to Aid Hilton (HLT) Q1 Earnings
Hilton Worldwide Holdings Inc. HLT is scheduled to report first-quarter 2024 results on Apr 24, before the opening bell. In the last reported quarter, the company registered an earnings surprise of 7.7%.
How are Estimates Faring?
The Zacks Consensus Estimate for the first-quarter bottom line is pegged at $1.41 per share, indicating an improvement of 13.7% from $1.24 reported in the year-ago quarter.
For revenues, the consensus mark is pegged at nearly $2.6 billion, suggesting growth of 11.5% from the prior-year quarter’s figure.
Hilton Worldwide Holdings Inc. Price and EPS Surprise
Hilton Worldwide Holdings Inc. price-eps-surprise | Hilton Worldwide Holdings Inc. Quote
Let's take a look at how things have shaped up in the quarter.
Factors at Play
Hilton’s first-quarter revenues are likely to have benefited from a steady leisure demand, continued recovery in business transient and group businesses and expanded partnerships. This and the emphasis on unit expansion, loyalty programs and asset-light business model are likely to have aided the company’s performance in the to-be-reported quarter.
Improvement in system-wide revenue per available room (RevPAR), attributable to increased occupancy rates and average daily rate (ADR), is likely to have driven the company’s first-quarter top line. For first-quarter 2024, the company expects RevPAR growth to be between 2% and 4% year over year.
Anticipation for continued positive momentum in signing starts and conversions, particularly with the bolstering effect of the two latest brands, Spark and LivSmart Studios, are likely to have driven hotel openings in the first quarter.
The emphasis on the Hilton for Business initiative, featuring a new booking website and tailored benefits crafted for small and medium-sized businesses (SMBs), is likely to have aided the company’s top line in the first quarter. SMBs constitute about 85% of the business transient mix and are increasingly contributing to the group mix. Acknowledging the resilience and potential for higher rates within this customer segment, the aspects are believed to have contributed positively to the company's first quarter performance.
Strong contributions across the company’s Base and other management fees, Incentive management fees and Owned and leased hotels are likely to get reflected in the first-quarter top line. We expect Franchise and licensing fees, Base and other management fees and Incentive Management Fees to increase 18.7% year over year (to $603.1 million), 3% year over year (to $82.4 million) and 1.6% year over year (to $66 million), respectively.
For first-quarter 2024, Hilton anticipates net income in the range of $340-$359 million. Adjusted EBITDA is expected to be between $690 million and $710 million.
However, elevated levels of inflation and interest rates, pose challenges to the execution of the company’s growth strategy. HLT projects first-quarter EPS (adjusted for special items) to be between $1.36 and $1.44.
Our take
Considering the factors, investors may view Hilton favorably. The company's strategic initiatives, strong financial performance and positive outlook for the future suggest that it could be an attractive investment opportunity. However, investors should be cautious and closely monitor economic indicators like inflation and interest rates, as they could affect growth prospects.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Hilton this time. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. However, that's not the case here.
Earnings ESP: Hilton has an Earnings ESP of -0.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
Fox Corporation FOXA has an Earnings ESP of +15.53% and a Zacks Rank of 3 at present.
FOXA is expected to register a 23.4% increase in earnings for the to-be-reported quarter. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 71.1%.
DraftKings Inc. DKNG currently has an Earnings ESP of +36.22% and a Zacks Rank of 3.
DKNG’s earnings for the to-be-reported quarter are expected to increase 67.8%. It reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, with a negative surprise of 57.1% on average.
Funko, Inc. FNKO currently has an Earnings ESP of +6.90% and a Zacks Rank of 3.
FNKO’s earnings for the to-be-reported quarter are expected to increase 40.8%. It reported better-than-expected earnings in three of the trailing four quarters and missed on one occasion, the average surprise being 42.8%.
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Fox Corporation (FOXA) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
Funko, Inc. (FNKO) : Free Stock Analysis Report
DraftKings Inc. (DKNG) : Free Stock Analysis Report
