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Leisure Stocks to Watch for Earnings on Feb 17: HLT, H, CHH

Hotel stocks, which are part of the Leisure industry, continue to bear the brunt of dismal revenue per available room (RevPAR) and occupancy rate, thanks to the coronavirus pandemic.

Although occupancy and RevPAR are likely to have increased sequentially in fourth-quarter 2020, it is expected to be well below pre-pandemic levels. Per STR, occupancy rate in 2020 was 44%, down 33.3% year over year. Moreover, average daily rate (ADR) and RePAR in 2020 was $103.25 and $45.48, down 21.3% and 47.5%, year over year, respectively.

Meanwhile, increase in travel demand in China is benefiting the industry. With outbreak under sufficient control, domestic travel restrictions are being lifted, which is leading to improvement in the daily number of passenger flights. Moreover, businesses are picking up.

However, higher costs are a persistent concern for the industry participants. Given that the coronavirus pandemic continues to impact the global travel industry, hoteliers are focusing on cost-saving measures to counter the crisis. The industry participants have not only discontinued share repurchase activity but also suspended dividends to improve liquidity.

All said, let’s take a sneak peek at three leisure stocks, which are part of the broader Consumer Discretionary sector, and are slated to report financial results on Feb 17.

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

Hilton Worldwide Holdings Inc. HLT is scheduled to report fourth-quarter 2020 results before the opening bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 166.7%.

The coronavirus pandemic is likely to have negatively impacted Hilton’s fourth-quarter performance. Notably, strict government restrictions in Europe are likely to have had affected fourth-quarter top line. Also, high operating and fixed costs stemming from the pandemic are likely to have hurt margins in the to-be-reported quarter. Although sequential improvements in occupancy rates are likely during the fourth quarter (owing to hotel reopening’s and easing of travel restrictions), RevPAR is expected to match third-quarter 2020 levels.

Moreover, dismal performance across the company’s Franchise and licensing fees, Incentive management fees as well as Base and other management fees is likely to get reflected in the fourth-quarter top line.

The consensus estimate for Franchise and licensing fees is pegged at $234 million, indicating a decline of 43.2% from $412 million reported in the previous quarter. Incentive management fees are currently projected at $9.1 million, indicating a decline of 85.6% from $63 million in the year-ago quarter. Base and other management fees are estimated at $28.5 million, indicating a decline of 65.7% from $83 million in the year-ago quarter. (Read more: Hilton to Report Q4 Earnings: What's in the Offing?)

The company has a Zacks Rank #4 and an Earnings ESP of +17.39%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Worldwide Holdings Inc. Price and EPS Surprise

 

Hilton Worldwide Holdings Inc. price-eps-surprise | Hilton Worldwide Holdings Inc. Quote

 

Hyatt Hotels Corporation H is scheduled to report fourth-quarter 2020 results after the closing bell. In the last reported quarter, the company reported an earnings miss of 18.4%.

Hyatt’s fourth-quarter 2020 results are likely to have been negatively impacted by the coronavirus pandemic. Although occupancy rates are improving in greater parts of China, rise in COVID-19 cases (across the United States and Europe) along with quarantines and travel restrictions are likely to have affected the company’s fourth-quarter top line. This along with high operating costs stemming from the pandemic is likely to have had hurt margins in the quarter under review.

Notably, the Zacks Consensus Estimate for Management and franchise fees is pegged at $49.8 million, which indicates a decline of 69% from $161 million reported in the previous quarter. The consensus mark for Owned and leased hotels revenues is currently pegged at $99 million, indicating a decline of 78.4% from $458 million in the year-ago quarter. (Read more: Factors Setting the Tone for Hyatt This Earnings Season)

The company has a Zacks Rank #5 and an Earnings ESP of +4.93%.

Hyatt Hotels Corporation Price and EPS Surprise

 

Hyatt Hotels Corporation price-eps-surprise | Hyatt Hotels Corporation Quote

 

Choice Hotels International, Inc. CHH is scheduled to report fourth-quarter 2020 results after the opening bell. In the last reported quarter, the company reported earnings miss of 8.3%.

The Zacks Consensus Estimate for fourth-quarter bottom line is pegged at 66 cents, which suggests a decline from earnings of 92 cents reported in the prior-year quarter. Meanwhile, the consensus mark for revenues is at $203.9 million, suggesting a decline of 24% from the prior-year quarter’s levels.

The company has a Zacks Rank #4 and an Earnings ESP of -0.87%.

 

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Choice Hotels International, Inc. (CHH): Free Stock Analysis Report
 
Hyatt Hotels Corporation (H): Free Stock Analysis Report
 
Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report
 
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