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Bear of the Day: Hilton (H)

David Bartosiak
·2 min read

It does not take an in-depth analysis to realize that the hotel industry has been under serious pressure during the worldwide COVID pandemic. It could take years for the industry to bounce back. Many hotels are going to go completely out of business. Today’s Bear of the Day gives me a chance to take a closer look at one big name in the hotel industry to see how bad the earnings outlook has been hit.

I’m talking about Hyatt Hotels (H). Hyatt Hotels Corporation, a hospitality company, develops, owns, operates, manages, franchises, licenses, or provides services to hotels, resorts, and other properties. As of June 30, 2020, its hotel portfolio consisted of approximately 900 hotels in 65 countries.

Currently, Hyatt is a Zacks Rank #5 (Strong Sell). The reason for the negative Zacks Rank is the series of negative revisions coming from analysts. Over the last sixty days, six analysts have cut their earnings estimates for the current year while five have done so for next year. The impact has been rather dramatic and bearish. Current year Zacks Consensus Estimates were cut down from a $3.04 loss to at $4.42 loss. Next year’s number has been cut from a 50-cent loss to a $2.02 loss.

Hyatt Hotels Corporation Price and Consensus

Hyatt Hotels Corporation Price and Consensus
Hyatt Hotels Corporation Price and Consensus

Hyatt Hotels Corporation price-consensus-chart | Hyatt Hotels Corporation Quote

While a $2.02 per share loss is not something long-term investors want to see, it’s important to point out the growth here. Analysts are forecasting EPS growth of 54.36%. Looking at the revenue numbers, current year revenues are slated to come in at $2.32 billion. That is a 53.79% contraction in sales for this year. Next year, that number is forecast to balloon 56.96% to $3.64 billion. The bottom line here is, the stock is down but not out.

The Hotels and Motels industry currently ranks in the Bottom 9% of our Zacks Industry Rank. There is only one stock in this industry which is a Zacks Rank #2 (Buy). That is Green Tree Hospitality Group (GHG). There are several Zacks Rank #3 (Hold) stocks in the industry like Extended Stay America (STAY).

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