What Analysts Recommend for Hilton ahead of 1Q17 Results
Hilton’s consensus 12-month target price is $64.6, which indicates a 12.6% return potential over its April 21 closing price of $58.
The hotel sector is capital intensive, and companies in the industry normally carry high debt.
Hilton (HLT) currently trades at a forward EV-to-EBITDA multiple of 17.6x.
Hilton (HLT) started paying dividends in mid-2015.
For 1Q17, analysts are estimating Hilton’s (HLT) revenue to fall 25% to $2.1 billion.
A hotel’s operational efficiency is measured by its RevPAR (revenues per available room), which is calculated by dividing a hotel’s total guest room revenue by its room count.
For the first quarter of 2017, analysts are estimating that Hilton’s (HLT) revenue will fall 25% to $2.1 billion.
Among the five major hotels, most analysts seem to favor Hilton Worldwide (HLT). However, Marriott International (MAR) has the highest following.
According to the University of Michigan Consumer Sentiment Index, consumer confidence for February 2017 surged to 95.7%, 4.0 percentage points higher than in February 2016.
According to STR Global’s US Construction Pipeline Report for January 2017, rooms under contract rose 16.1% to reach 576,000 rooms in 4,763 hotel properties.
According to data released by data company STR for 2016, occupancy rates saw a year-over-year (or YoY) rise of 0.1% to 65.5%.
ADR (average daily rate) measures the average room price paid in the market. In 2016, the ADR rose 3.1% year-over-year (or YoY) to $123.97, slower than the 4.4% rise it recorded in 2015.
In January 2017, the Baird/STR Hotel Stock Index rose 0.5% to close at 3,723. The index recorded a great performance in 2016 as well.
The strength of the US dollar measured against currencies that are widely used in international trade is measured by the Trade Weighted Dollar Index.
A booming economy allows people to spend money on discretionary items such as air travel, so hotel revenues are higher during economic growth and lower during economic contraction.
After rising 8.7% in December to $53.72, crude prices fell 2.3% in January 2017 to $52.81 then rose 2.4% to $54.01 in February 2017.
The hotel industry is largely driven by the growth of the general economy, which instills spending confidence in both businesses and households.
Marriott (MAR) currently trades at a forward EV-to-EBITDA multiple of 15.8x. It’s significantly higher than its average valuation of 13.9x since January 2008.
Of the 29 analysts tracking Marriott International (MAR), 17.0% (five analysts) have a “strong buy” recommendation for the stock.
Eventually, artificial intelligence will allow Marriott to make customized recommendations to customers based on what they have shared with Marriott.