Hilton's Growth Among The Strongest In Lodging Industry

Argus analyst John Staszak initiated coverage of Hilton Worldwide Holdings Inc HLT with a Buy rating and $80 price target.

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In Review

Estimated 2017 EPS is $1.99, against the consensus of $1.81, and 2018 EPS is estimated at $2.25, above the consensus of $2.13. Hilton has exceeded consensus EPS estimates in five of the previous six quarters.

Adjusted EBITDA also beat consensus in the first quarter at $424 million versus $392 million and guidance of $380 million–$400 million, a marginal rise of 550 basis points year over year to 55.4 percent.

Revenue rose 25 percent to $2.2 billion, and revenue per available room was at the high end of management’s 1–3 percent guidance.

Analyst's Take

“We expect Hilton’s room growth to be among the strongest in the lodging industry, driven by a solid development pipeline, new brands, and a well-regarded loyalty program,” said Staszak.

Park Hotels & Resorts Inc PK and Hilton Grand Vacations Inc HGV spun off from Hilton in December 2016. The former is down 6.67 percent since launch while the latter is up 38.85 percent.

The analyst is also encouraged by Hilton’s shift to franchising, which generates a steady stream of revenue without requiring a high capital investment.

The company has plans to return up to $1 billion to shareholders through buybacks, with over $700 million left to spend.

Related Links: Turning Your Vacation Into A Stock Portfolio Hilton Board of Directors Approves Spin-off of Park Hotels & Resorts and Hilton Grand Vacations _______ Image Credit: "Downtown Disney View from the Hilton" By Hiltondisney - Own work, CC BY-SA 3.0, via Wikimedia Commons