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Hilton Boosts Shareholder Value With Additional $2B Buyback

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Zacks Equity Research
·3 min read
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In an attempt to boost shareholder value, Hilton Worldwide Holdings Inc.’s HLT board of directors authorized an additional $2 billion of common stock under its existing stock repurchase program. The company now has approximately $2.3 billion for repurchase.

The company will initiate share repurchase in the open market, through privately-negotiated transactions complying with the rules as well as regulations of the Securities and Exchange Commission. However, the amount and timing of the repurchases are subject to factors primarily related to available liquidity, cash flow and overall market conditions.

In 2019, Hilton bought back 16.9 million shares for approximately $1.5 billion. During fourth-quarter 2019, the company repurchased 4.3 million shares of its common stock for roughly $443 million. Since the inception of Hilton's stock repurchase program in March 2017, the company has repurchased approximately 55.5 million shares of its common stock for approximately $4.3 billion at an average price per share of $77.91.

Nonetheless, this initiative is in sync with the company’s motive to strengthen its shareholders’ value through regular buybacks.

Price Performance

Shares of Hilton have gained 11.1% in the past year against the industry’s decline of 5.7%. The outperformance can be primarily attributed to improving economic indicators and expansion strategies, its industry-leading loyalty program as well as the asset-light business model. Moreover, earning estimates for 2020 have moved north in the past 30 days, which depicts the stock’s growth potential. However, coronavirus outbreak, intense competition and cyclical nature of the industry are concerns.

Zacks Rank & Key Picks

Hilton currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some better-ranked stocks in the Zacks Consumer Discretionary sector are Calix, Inc. CALX, Installed Building Products, Inc. IBP and Griffon Corporation GFF, each sporting a Zacks Rank #1.

Griffon has trailing four-quarter positive earnings surprise of 20.3%, on average. The company’s earnings beat estimates in all of the last four quarters.

Calix and Installed Building Products 2020 earnings are expected to rise 250% and 11.3%, respectively.

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