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Category: Stock Market and Hilton Grand Vacations
Date: 4 November 2019 Stock Price: $35.45 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Hilton Grand Vacations, a leading vacation time share company with vacation ownership resorts in selected vacation destinations such as Florida , California and Hawaii.
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About Hilton Grand Vacations
Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a leading global timeshare company. With headquarters in Orlando, Florida, Hilton Grand Vacations develops, markets and operates a system of brand-name, high-quality vacation ownership resorts in select vacation destinations. The Company also manages and operates two innovative club membership programs: Hilton Grand Vacations Club® and The Hilton Club®, providing exclusive exchange, leisure travel and reservation services for more than 320,000 club members.
Financial overview of Hilton Grand Vacations 3rd quarter 2019 earnings results
The data below refers to the latest quarter's data (unless specified otherwise)
- Total revenues: $466 million (up from $427 million for the same quarter of the previous year)
- Total revenues increased by 9.1% over the last 12 months
- Total operating expenses: $384 million (up from $364 million for the same quarter of the previous year)
- Total operating expenses increased by 5.49% over the last 12 months
- Net income: $50 million (up from $41 million for the same quarter of the previous year)
- Diluted earnings per share: $0.59 (up from $0.42 for the same quarter of the previous year)
- PE ratio of Hilton Grand Vacations: 16.6
- Number of shares in issue: 84.569 million
- Cash and cash equivalents: $113 million
- Cash and cash equivalents per share: $1.33
- Cash and cash equivalents makes up 3.87% of Hilton Grand Vacations market capital
- Cash and cash equivalents makes up 3.7% of Hilton Grand Vacations total assets
- Timeshare financing receivables: $1.139 billion
- Timeshare financing receivables makes up 37.49% of Hilton Grand Vacations total assets
- Stockholders equity in Hilton Grand Vacations: $494 million
- Stockholders equity per share in Hilton Grand Vacations: $5.84
- Hilton Grand Vacations is trading at 5.9 times its stockholders equity per share which is outside the expected range of between 2 and 4 that most firms tend to trade at
- Cash generated from operations: $76 million
- Cash generated from operations per share: $0.89
Hilton Grand Vacations (NYSE: HGV) management commentary on 3rd quarter 2019 earnings
ORLANDO, Fla. (Oct. 31, 2019) – Hilton Grand Vacations Inc. (NYSE:HGV) (“HGV” or “the Company”) today reports its third quarter 2019 results
“We saw strong Adjusted EBITDA growth and healthy NOG this quarter, driven by record owner engagement,” said Mark Wang, president and CEO of Hilton Grand Vacations. “We are starting to realize the benefits of the operational and cost improvements that we announced last quarter. Overall, I am encouraged by our progress and believe we are well positioned for growth as we exit this year and prepare for the launch of our highly anticipated new inventory beginning in 2020.”
Third Quarter 2019 Results
“We saw strong Adjusted EBITDA growth and healthy NOG this quarter, driven by record owner engagement,” said Mark Wang, president and CEO of Hilton Grand Vacations. “We are starting to realize the benefits of the operational and cost improvements that we announced last quarter. Overall, I am encouraged by our progress and believe we are well positioned for growth as we exit this year and prepare for the launch of our highly anticipated new inventory beginning in 2020.”
Third Quarter 2019 Results
- Total revenues for the third quarter were $466 million compared to $427 million for the same period in 2018.
- Total revenues were affected by a deferral of $15 million in the current period and a deferral of $45 million in the same period in 2018.
- Net income for the third quarter was $50 million compared to $41 million for the same period in 2018.
- Net income was affected by a net deferral of $8 million in the current period and a net deferral of $25 million in the same period in 2018.
- Diluted EPS for the third quarter was $0.59 compared to $0.42 for the same period in 2018.
- Diluted EPS was affected by a net deferral of $8 million or $0.09 per share in the current period and a net deferral of $25 million or $0.26 per share in the same period in 2018.
- Adjusted EBITDA for the third quarter was $111 million compared to $80 million for the same period in 2018.
- Adjusted EBITDA was affected by a net deferral of $8 million in the current period and a net deferral of $25 million in the same period in 2018.
- Tours were up 8.5% compared to the same period in 2018.
- Contract sales in the third quarter were $360 million, a decrease of 1.1% from the same period in 2018.
- Net Owner Growth (NOG) for the 12 months ended Sept. 30, 2019, was 5.6%
Full Year 2019 Outlook
- Net income is now projected to be between $175 million and $190 million, reflecting restructuring costs, a slightly higher net deferral, and a slightly higher tax rate.
- Net income is now expected to be affected by a net deferral of $39 million.
- Diluted EPS is now projected to be between $1.97 and $2.13.
- Diluted EPS is now expected to be affected by a net deferral of $39 million or $0.44 per share.
- Adjusted EBITDA is now projected to be between $376 million and $396 million.
- Adjusted EBITDA is now expected to be affected by a net deferral of $39 million.
- Given our third quarter results, we now expect to be at the high end of this range.
- Full-year 2019 contract sales are expected to be flat to down 3.0%.
- Given our third quarter results, we now expect to be at the high end of this range.
- Adjusted free cash flow is projected to be between $50 million and $110 million.
- The 2019 outlook does not reflect any additional share repurchases.
Hilton Grand Vacations (NYSE: HGV) stock price history
The image below obtained from Google, shows the stock price history of Hilton Grand Vacations since their listing. And its been a very volatile but overall very good time for Hilton Grand Vacations stockholders. At listing it was trading at around $26 a stock and its currently trading at $35.34 a stock. That's a decent return of 35.9% provided to Hilton Grand Vacations stockholders since their listing
The stock of Hilton Grand Vacations is trading at a lot closer to its 52 week high of $36.56 than it is to its 52 week low of $24.16 stock, which to us is a clear indication that the short term sentiment and momentum of Hilton Grand Vacations stock is very positive at this point in time,
The stock of Hilton Grand Vacations is trading at a lot closer to its 52 week high of $36.56 than it is to its 52 week low of $24.16 stock, which to us is a clear indication that the short term sentiment and momentum of Hilton Grand Vacations stock is very positive at this point in time,
Recent coverage of Hilton Grand Vacations
The extract below discusses the latest news regarding a potential buyout of Hilton Grand Vacations as obtained from TheStreet.com
Hilton Grand Vacations (HGV - Get Report) is the target of two takeover bids, including Apollo Global Management's (APO - Get Report) offer of around $40 a share, according to a media report. Blackstone Group, (BX - Get Report) which like Apollo is a New York private-equity firm, has also bid for the Orlando, Fla., resort operator, people familiar with the matter told Bloomberg.
Hilton Grand shares closed Monday up 5.9% at $34.57. Earlier, they traded for as much as $36, a 52-week high. Apollo Global shares closed little changed at $38.67. Blackstone fell 1.3% to $46.50. The hedge fund Elliott Management, which is a Hilton Grand shareholder, had been urging the company to put itself up for sale, people familiar with the matter told the news service last month
Read the full article here
Hilton Grand Vacations (HGV - Get Report) is the target of two takeover bids, including Apollo Global Management's (APO - Get Report) offer of around $40 a share, according to a media report. Blackstone Group, (BX - Get Report) which like Apollo is a New York private-equity firm, has also bid for the Orlando, Fla., resort operator, people familiar with the matter told Bloomberg.
Hilton Grand shares closed Monday up 5.9% at $34.57. Earlier, they traded for as much as $36, a 52-week high. Apollo Global shares closed little changed at $38.67. Blackstone fell 1.3% to $46.50. The hedge fund Elliott Management, which is a Hilton Grand shareholder, had been urging the company to put itself up for sale, people familiar with the matter told the news service last month
Read the full article here
Hilton Grand Vacation (NYSE: HGV) stock valuation
So what do we value Hilton Grand Vacations stock at after the release of their 3rd quarter 2019 earnings and the fiscal guidance provided? Based on Hilton Grand Vacations earnings report and fiscal guidance provided our valuation models provides a target (full value) price for Hilton Grand Vacations at $31.80 a stock. We therefore believe that the stock of Hilton Grand Vacations is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $31.90 therefore we believe a good entry point into Hilton Grand Vacations stock is at $28.70 or below. We expect the stock of Hilton Grand Vacations to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued. However should the rumours regarding a buy out offer for the group be true investors stand to make a quick 14% based on their latest traded price. But we do not subscribe to the old adage of buy on rumour and sell on fact. We only look at what the fundamentals are saying a company is worth and at this point we believe Hilton Grand Vacations is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $31.90 therefore we believe a good entry point into Hilton Grand Vacations stock is at $28.70 or below. We expect the stock of Hilton Grand Vacations to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued. However should the rumours regarding a buy out offer for the group be true investors stand to make a quick 14% based on their latest traded price. But we do not subscribe to the old adage of buy on rumour and sell on fact. We only look at what the fundamentals are saying a company is worth and at this point we believe Hilton Grand Vacations is overvalued.
Next earnings release of Hilton Grand Vacations
It is expected that Hilton Grand Vacations will publish their 4th quarter and full year earnings for their 2019 fiscal year in early February 2020