Hilton has been on a declining trend
Hilton’s stock has fallen by almost 14% since April 2015. Its industry peers have also seen a similar trend. Marriott (MAR) fell by 11%, Starwood (HOT) fell by 10%, Hyatt (H) fell by 10%, and Wyndham (WYN) fell by 12%. In contrast, the Consumer Discretionary ETF (XLY) rose by 4% in the same period.
Stock market reactions to 2Q15 earnings
Hilton Worldwide reported its second quarter earnings on July 29, 2015. Hilton stock surged by about 3% on the same day since the company’s results exceeded analyst estimates, bringing a positive surprise for the quarter. The company reported earnings of $161 million, or 25 cents per share, on revenue of $2.92 billion. The company’s revenue rose by 9.56% year-over-year (or YoY). This was against the earnings estimate of 23 cents per share on estimated revenue of $2.89 billion.
Despite growth in Hilton’s (HLT) top line, its earnings dipped by about 23% YoY. This fall in the earnings came as a result of an 11% YoY spike in expenses from $2.23 billion to about $2.5 billion. On a year-to-date basis, the company’s expenses have grown by a full $500 million. This fall in the bottom line was due to the strengthening of the dollar and the political uncertainty in some areas of its operations.
The other positive news in the earnings was the company’s guidance, which was close to analyst expectations. The company’s current quarter earnings guidance was in the range of 21 cents to 23 cents per share in comparison to analyst expectations of 23 cents per share. The company also upgraded its full-year guidance for earnings from 79 cents to 83 cents per share to 80 cents to 84 cents per share.
Hilton Worldwide (HLT) is a global hospitality company that owns, manages, and franchises a portfolio of brands, including Conrad Hotels & Resorts, Curio by Hilton, Canopy by Hilton, DoubleTree by Hilton, Hilton Hotels & Resorts, Embassy Suites Hotels, Hampton Inn, Hilton Garden Inn, Home2 Suites by Hilton, Homewood Suites by Hilton, and Hilton Grand Vacations.
In our next article, we will look at the factors that drove the company’s top line.