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Hyatt (H) Earnings & Revenues Drive Past Estimates in Q1

Zacks Equity Research

Hyatt Hotels Corporation H reported better-than-expected results in the first quarter of 2019. With this, the bottom line exceeded the consensus mark for 13 straight quarters while the top line surpassed estimates after missing the same for the fourth consecutive quarter.

Adjusted earnings of 45 cents per share outpaced the Zacks Consensus Estimate of 21 cents. In the prior-year quarter, the company reported earnings of 33 cents per share. Total revenues were $1,241 million, which increased 11.9% from the prior-year quarter figure andbeat the consensus estimate by 9.3%.

Following the quarterly results, shares of Hyatt increasedslightly in after-hours trading.

RevPAR Details

In the reported quarter, comparable system-wide revenues per available room (RevPAR) increased 1.8%, taking into account a 2.7% increase of the same at comparable owned and leased hotels. However, comparable U.S. hotel RevPAR fell 0.3%. While full-service hotel RevPAR was up 0.1%, that of select service hotel declined 1.3%.

Hyatt Hotels Corporation Price, Consensus and EPS Surprise

 

Hyatt Hotels Corporation Price, Consensus and EPS Surprise | Hyatt Hotels Corporation Quote

Operating Highlights

Net income decreased 84.6% to $63 million in the first quarter. Meanwhile, adjusted EBITDA decreased 7.3% to $187 million (down 6.1% in constant currency). Adjusted EBITDA margin declined 220 basis points (bps) to 28.5%.

Meanwhile, comparable owned and leased hotels’ operating margin expanded 120 basis points to 24.7%.

Segmental Details

Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management, and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management, and Franchising.

Revenues at Owned and Leased Hotels totaled $458 million, down 9.6% from the year-ago quarter number. Comparable owned and leased hotels RevPAR increased 2.7%. ADR increased 3.4% and occupancy declined 50 bps from a year ago.

On the flip side, adjusted EBITDA decreased 10%. At a constant currency, the same declined 9.3% due to transaction activities.

Revenues at Americas Management and Franchisingsummed $139 million, reflecting a 40.8% increase from the year-ago figure and 41.4% rise at a constant currency.

RevPAR for comparable Americas full-service hotels increased 3.1%. While ADR climbed 3.4%, occupancy decreased 30 bps from the year-ago quarter number.

Meanwhile, RevPAR for comparable Americas select-service hotels was down 1.5%. While occupancy decreased 90 bps, ADR declined 0.2% in the quarter under review.

Adjusted EBITDA increased 5.3% (up 5.8% in a constant currency) to $92 million.

Revenues at ASPAC Management and Franchising rose 6.2% year over year (up 10.2% in a constant currency) to $32 million.

RevPAR for comparable ASPAC full-service hotels increased 1.2%. Moreover, occupancy rose 80 bps but ADR was flat in the quarter.

Adjusted EBITDA increased 6.5% (up 11.9% at constant currency) to $20 million.

Revenues at EAME/SW Asia Management and Franchising remained flat at $18 million.

Comparable EAME/SW Asia full-service hotels’ RevPAR increased 3%. ADR decreased 0.8% and occupancy rose 260 bps.

Adjusted EBITDA increased 0.8% (up 7.3% at a constant currency) to $10 million.

Balance Sheet

As of Mar 31, 2019, Hyatt reported cash and cash equivalents of $547million. The total debt was $1.8 billion as of Mar 31, 2019.

During the first quarter of 2019, Hyatt repurchased 1,452,858 Class A shares for $102 million. It ended the first quarter with 38,401,176 Class A and 67,115,828 Class B shares issued and outstanding.

2019 Guidance

For 2019, Hyatt expects net income of $144-183 million, up from the earlier $109-$147 million. The company continues to expect adjusted EBITDA of $780-$800 million. Comparable system-wide RevPAR is still anticipated to increase 1-3% year over year.

On a net-rooms basis, Hyatt continues to expect unit growth of roughly 7-7.5%, reflecting 80 new hotel openings.

Zacks Rank & Stock to Consider

Hyatt, which shares the same space with Marriott MAR and Hilton HLT, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the industry isExtended Stay America STAY, which currently carries a Zacks Rank #2 (Buy) and has a long-term EPS growth rate of 5%.

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