Long-established in the REITs industry, Host Hotels & Resorts Inc (NASDAQ:HST) has enjoyed a stellar reputation. It has recently witnessed a surge of 2.58%, juxtaposed with a three-month change of -1.65%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Host Hotels & Resorts Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 5/10
Profitability rank: 6/10
Growth rank: 1/10
GF Value rank: 8/10
Momentum rank: 7/10
Based on the above method, GuruFocus assigned Host Hotels & Resorts Inc the GF Score of 69 out of 100, which signals poor future outperformance potential.
Host Hotels & Resorts Inc: A Snapshot
Host Hotels & Resorts Inc, with a market cap of $11.87 billion, owns 77 predominantly urban and resort upper-upscale and luxury hotel properties representing nearly 42,000 rooms, mainly in the United States. The company's sales stand at $5.23 billion with an operating margin of 15.56%. Host recently sold off the company's interests in a joint venture owning a portfolio of hotels throughout Europe and also sold other joint ventures that owned properties in Asia and the United States. The majority of Host's portfolio operates under the Marriott and Starwood brands.
Financial Strength Analysis
Host Hotels & Resorts Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 4.67, although better than 66.87% of 640 companies in the REITs industry, is still below the preferred threshold of five. The company's Altman Z-Score is just 1.97, which is below the safe threshold of 2.99. Additionally, the company's low cash-to-debt ratio at 0.17 indicates a struggle in handling existing debt levels.
A lack of significant growth is another area where Host Hotels & Resorts Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -2.9 per year over the past three years, which underperforms worse than 67.82% of 634 companies in the REITs industry. Lastly, Host Hotels & Resorts Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Host Hotels & Resorts Inc has a commendable history, its future performance may be hampered by its financial health and growth prospects. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.