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Can Hilton's Strategic Measures Shield It From Coronavirus Scare?

Zacks Equity Research

Given that the Hotels and Motels industry is currently grappling with the coronavirus (COVID-19) outbreak, Hilton Worldwide Holdings Inc HLT has come up with strategic measures to protect its business from this crisis situation.

The company decided to suspend its dividend and stock buyback programs. The decision is in line with its motive to preserve cash and maintain ample liquidity to avoid a possible recession due to the coronavirus outbreak.

Moreover, in an effort to reduce costs, Hilton president and CEO Christopher J. Nassetta decided to forgo his salary for the remaining 2020 while the company’s executive committee is ready to accept a 50% pay cut. The company also decided to furlough part of its corporate workforce. However, members who are not laid off can expect a pay cut of up to 20% during the crunch.

Notably, with the coronavirus pandemic showing no signs of abating, most companies across the world are scrambling to take measures to tackle the emergency. The companies are not just stalling productions but are also focusing on cost-cutting actions. Despite the best efforts by policymakers, it is getting increasingly difficult for companies to survive amid such trying times.

Withdraws Outlook

Earlier, the company withdrew its outlook due to the coronavirus scare. Nassetta said, "With the coronavirus now spreading beyond China and the Asia Pacific region, and the related increase in travel restrictions and cancellations around the world, we believe that the potential negative impact will be greater than our previous estimate and have decided to withdraw our previously announced guidance.”

Although, this deadly severe acute respiratory syndrome claimed too many lives so far, the company shows enough resilience to fight the current calamity and emerge unscathed to welcome back its team members and guests when it is safe to travel. So far this year, shares of the company have declined 34% compared with the industry’s fall of 40.3%.

Zacks Rank

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

 

Some better-ranked stocks in the Consumer Discretionary space are Vista Outdoor Inc. VSTO, YETI Holdings, Inc. YETI and Mattel, Inc. MAT, each sporting a Zacks Rank #1.

2020 earnings for Vista Outdoor, YETI Holdings and Mattel are expected to rise 42.9%, 11.7% and 120%, respectively.

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Mattel, Inc. (MAT) : Free Stock Analysis Report
 
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
 
Vista Outdoor Inc. (VSTO) : Free Stock Analysis Report
 
YETI Holdings, Inc. (YETI) : Free Stock Analysis Report
 
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