What's in the Offing for Host Hotels (HST) in Q3 Earnings?
Host Hotels & Resorts, Inc. HST is scheduled to release third-quarter 2023 earnings on Nov 1, after market close. While the quarterly results are likely to display year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the previous quarter, the Bethesda, MD-based lodging real estate investment trust (REIT) delivered a negative surprise of 5.36% in terms of adjusted FFO per share. The quarterly results reflected lower-than-anticipated revenues.
Over the trailing four quarters, Host Hotels’ adjusted FFO per share surpassed estimates on two occasions and missed in the remaining two, the average beat being 2.25%. The graph below depicts this surprise history:
Host Hotels & Resorts, Inc. Price and EPS Surprise
Host Hotels & Resorts, Inc. price-eps-surprise | Host Hotels & Resorts, Inc. Quote
Factors at Play
Host Hotels enjoys a portfolio of luxury and upper-scale hotels across the top 20 lucrative U.S. markets, with a strong presence in the attractive Sunbelt region. These properties are strategically located in central business districts of major cities with proximity to airports and resort/conference destinations, driving demand.
The continued recovery in business transient demand — led by small and medium-sized businesses — and encouraging group travel demand are likely to have aided occupancy and hotel revenue per available (RevPAR) growth in the third quarter.
The Zacks Consensus Estimate for quarterly RevPAR stands at $200.99, indicating an increase of 4.6% from the year-ago quarter’s $192.06. Our estimate is pegged at $203.98.
The consensus mark for the average occupancy rate is pegged at 73.1%, suggesting an improvement from the prior-year quarter’s reported figure of 69.7%. We expect the average occupancy rate for the quarter to be 73.1%.
The Zacks Consensus Estimate for HST’s quarterly revenues is presently pegged at $1.21 billion, implying growth of 1.7% from the prior-year period’s reported figure.
Host Hotels’ strategic capital allocations to improve its portfolio quality and strengthen its position in the United States, where it has a greater scale and competitive advantage, are likely to have given it an edge and driven margin expansion.
However, moderating leisure travel demand and rates at the company’s resorts, and a slower-than-anticipated return of group and business travel are anticipated to have cast a pall on the company’s quarterly performance to some extent. Also, lower inbound international travel might have been a concern for Host Hotels.
Further, higher interest expenses are expected to have been a spoilsport. We expect third-quarter 2023 interest expenses to rise 17.2% year over year.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the FFO per share has been unchanged at 35 cents over the past two months. Moreover, the figure implies a decline of 7.9% from the year-ago reported number.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Host Hotels this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: HST has an Earnings ESP of -2.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HST currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Ventas VTR is scheduled to report quarterly numbers on Nov 2. VTR has an Earnings ESP of +0.08% and a Zacks Rank of 3 currently.
SBA Communications SBAC is slated to report quarterly numbers on Nov 2. SBAC has an Earnings ESP of +0.27% and carries a Zacks Rank #3 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
Ventas, Inc. (VTR) : Free Stock Analysis Report
SBA Communications Corporation (SBAC) : Free Stock Analysis Report
