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Host Hotels (HST) to Post Q3 Earnings: What's in the Offing?

Host Hotels & Resorts, Inc. HST is scheduled to release third-quarter 2021 earnings on Nov 3, after market close. The company’s quarterly results will likely highlight year-over-year growth in revenues and funds from operations (FFO) per share.

The Bethesda, MD-based lodging real estate investment trust (REIT) came up with better-than-expected results both in terms of adjusted FFO per share and revenues in the previous quarter. The company’s revenue per available room (RevPAR) witnessed a significant year-over-year rise.

Over the trailing four quarters, the company surpassed estimates on all occasions, the average beat being 111.19%. The graph below depicts this surprise history:

Host Hotels & Resorts, Inc. Price and EPS Surprise

Host Hotels & Resorts, Inc. Price and EPS Surprise
Host Hotels & Resorts, Inc. Price and EPS Surprise

Host Hotels & Resorts, Inc. price-eps-surprise | Host Hotels & Resorts, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

The acceleration in vaccine distribution and favorable holiday travel trends have led to the recovery of hotel occupancy. The relaxation of regulations related to the pandemic and the reopening of hotels have enabled hotel operators to resume operations.

Driven by the above-mentioned favorable factors, Host Hotel prioritized projects in those assets, and markets that are anticipated to recover faster like leisure and drive-to destinations. This is anticipated to have helped it capture additional revenues amid the economic recovery.

As for Host Hotels, 83 of its 84 hotels were open as of Aug 3. This, along with a recovery in the leisure demand in specific drive-to leisure markets and Sunbelt regions, has enabled the hotel REIT to witness a gradual improvement in occupancy and RevPAR.

The company enjoys a strong Sunbelt exposure and presence in 20 top U.S. markets. Also, Host Hotels’ large property sizes are expected to have aided its hotels to capture the budding demand, while addressing the social-distancing measures. These are likely to have supported the hotel REIT’s recovery during the third quarter.

Moreover, the company has been magnifying its focus on acquisitions to include urban markets beyond the top 20, in search of higher portfolio EBITDA and revenues.

Given the strong balance-sheet position, the company has made significant acquisition of high-quality properties over the past years, which have scope for long-term growth. Additionally, in July, Host Hotels announced the acquisition of a fee simple interest in the 200-room Baker’s Cay Resort Key Largo, Curio Collection for roughly $200 million in cash in an off-market transaction.

With continued cost-containment and prudent expense-management efforts, the company is likely to have preserved liquidity. Such efforts include the reduction of hotel operating costs, redefining its operating model, and the suspension of dividend payments and stock repurchases.

However, since business travelers account for the majority of transient demand at its hotels, constrained business transient and group travel demand amid the pandemic might have affected the company’s third-quarter performance to some extent.

Q3 Earnings & Revenue Projections

The Zacks Consensus Estimate for Host Hotels’ third-quarter revenues is presently pegged at $801 million, suggesting a whopping 304.5% year-over-year jump.

Prior to the third-quarter earnings release, Host Hotels’ activities were adequate to gain adequate analyst confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 7.7% upward in the past month. It suggests a year-over-year surge of 227.3%.

Here is what our quantitative model predicts:

Host Hotels does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an FFO beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Host Hotels is -23.25%.

Zacks Rank: Host Hotels currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report surprises this quarter:

Life Storage LSI, slated to release earnings numbers on Nov 2, has an Earnings ESP of +0.21% and holds a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apple Hospitality REIT APLE, slated to release third-quarter earnings on Nov 4, has an Earnings ESP of +26.67% and sports a Zacks Rank of 1, at present.

CubeSmart CUBE, set to report quarterly numbers on Nov 4, has an Earnings ESP of +2.86% and carries a Zacks Rank of 2, at present.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report

Life Storage, Inc. (LSI) : Free Stock Analysis Report

CubeSmart (CUBE) : Free Stock Analysis Report

Apple Hospitality REIT, Inc. (APLE) : Free Stock Analysis Report

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