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Category: Stock Market and Hilton Worldwide
Date: 8 May 2020 Stock Price: $71.90 We take a look at the 1st quarter 2020 earnings report of Hilton Worldwide Holdings a company active in the hospitality space with more than 6 100 properties and over 970 000 rooms across 118 countries. The group has been hit hard by lockdowns across the world and bans on travel all instituted to stop the spread of coronavirus.
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About Hilton Worldwide Holdings
Hilton (NYSE: HLT) is a leading global hospitality company, with a portfolio of 18 world-class brands comprising more than 6,100 properties with more than 977,000 rooms, in 118 countries and territories. Dedicated to fulfilling its mission to be the world's most hospitable company, Hilton welcomed more than 3 billion guests in its 100-year history, earned a top spot on the 2019 World's Best Workplaces list and was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices. Through the award-winning guest loyalty program Hilton Honors, more than 106 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy, plus enjoy instant benefits, including digital check-in with room selection, Digital Key and Connected Room.
Overview of Hilton Worldwide's 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
The summary below shows the occupancy rate of Hilton Worldwide brands for Q1:2020 and the difference to the same quarter of previous year
Brand Occupancy in Q1:2020 Difference compared to same quarter of previous year
- Total revenue: $1.920 billion (down from $2.204 billion for the same quarter of the previous year)
- Total revenue decreased by -12.8% over the last 12 months
- Total expenses: $1.852 billion (down from $1.892 billion for the same quarter of the previous year)
- Total expenses decreased by -2.1% over the last 12 months
- So some margin squeeze for Hilton Worldwide, as their revenues declined yet their expenses increased
- Net income of Hilton Worldwide: $18 million (down from $158 million for the same quarter of the previous year)
- Diluted earnings per share: $0.06 (down from $0.54 for the same quarter of the previous year)
- PE ratio of Hilton Worldwide : 23.7
- Dividend per share: $0.15
- Dividend yield: 0.83%
- Diluted number of shares in issue: 280 million (down from 295 million for the same quarter of the previous year)
The summary below shows the occupancy rate of Hilton Worldwide brands for Q1:2020 and the difference to the same quarter of previous year
Brand Occupancy in Q1:2020 Difference compared to same quarter of previous year
- Waldorf Astoria Hotels & Resorts: 53.0% (17.9)%
- Conrad Hotels & Resorts: 45.8% (27.3)%
- Canopy by Hilton: 51.0% (10.7)%
- Hilton Hotels & Resorts: 53.9% (17.4)%
- Curio Collection by Hilton: 51.8% (11.7)%
- Tapestry Collection by Hilton: 50.6% (9.8)%
- DoubleTree by Hilton: 52.8% (16.1)%
- Embassy Suites by Hilton: 60.0% (15.1)%
- Hilton Garden Inn: 56.7% (13.9)%
- Hampton by Hilton: 55.7% (12.5)%
- Tru by Hilton: 53.2% (4.4)%
- Homewood Suites by Hilton: 65.7% (10.4)%
- Home2 Suites by Hilton: 63.0% (8.0)%
- System-wide: 56.0% (14.3)%
Hilton Worldwide's management commentary on their 1st quarter 2020 earnings
MCLEAN, VA (May 7, 2020) - Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its first quarter 2020 results. The following results reflect the material impact that the novel coronavirus ("COVID-19") pandemic had on Hilton's business, the effects of which were not significant until March 2020. Highlights include:
- Diluted EPS was $0.06 for the first quarter, and diluted EPS, adjusted for special items, was $0.74
- Net income was $18 million for the first quarter
- Adjusted EBITDA was $363 million for the first quarter
- System-wide comparable RevPAR decreased 22.6 percent on a currency neutral basis for the first quarter from the same period in 2019
- Approved 29,500 new rooms for development during the first quarter, growing Hilton's development pipeline to 405,000 rooms as of March 31, 2020, representing 9 percent growth from March 31, 2019
- Opened 8,800 rooms in the first quarter, contributing to 6,100 net additional rooms
- In April 2020, pre-sold Hilton Honors points to American Express for $1.0 billion in cash
- In April 2020, issued $1.0 billion of senior notes consisting of: (i) $500 million aggregate principal amount of 5.375% Senior Notes due 2025 and (ii) $500 million aggregate principal amount of 5.750% Senior Notes due 2028
- Giving effect to the Hilton Honors pre-sale and issuance of senior notes, as of March 31, 2020, cash, restricted cash and cash equivalents would have been $3.8 billion
Overview
Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We are currently experiencing unprecedented times as a result of the COVID-19 pandemic, and our number one priority remains protecting the safety and security of our guests, team members and owners. We have also taken precautionary measures to protect our business, including securing our liquidity position. Given the strength of our system and dedication of our people, we believe we are well-positioned to navigate this crisis and ultimately recover stronger." With the exception of the Asia Pacific region, Hilton's first quarter results were not significantly impacted by the COVID-19 pandemic until March 2020, with occupancy roughly flat through February in the Americas and Europe, Middle East and Africa ("EMEA") regions.
As such, the results for the three months ended March 31, 2020 are not indicative of future results and the material negative impact that the COVID-19 pandemic is expected to have on Hilton's business for an indeterminate length of time. For the three months ended March 31, 2020, system-wide comparable RevPAR decreased 22.6 percent primarily as a result of decreases in occupancy, and management and franchise fee revenues decreased 18 percent. The decreases were due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete and partial suspensions of hotel operations at many of Hilton's properties. For the three months ended March 31, 2020, diluted EPS was $0.06 and diluted EPS, adjusted for special items, was $0.74 compared to $0.54 and $0.80, respectively, for the three months ended March 31, 2019. Net income and Adjusted EBITDA were $18 million and $363 million, respectively, for the three months ended March 31, 2020, compared to $159 million and $499 million, respectively, for the three months ended March 31, 2019.
Development
In the first quarter of 2020, Hilton opened 67 new hotels, totaling 8,800 rooms, and achieved net unit growth of over 6,100 rooms. Additionally, during the quarter, Hilton signed the largest multi-brand deal in company history with Resorts World Las Vegas for a 3,500 room resort uniting Hilton Hotels & Resorts, LXR Hotels and Resorts and Conrad Hotels and Resorts. As of March 31, 2020, Hilton's development pipeline totaled nearly 2,670 hotels consisting of more than 405,000 rooms throughout 120 countries and territories, including 35 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 223,000 rooms were located outside the U.S., and 213,000 rooms were under construction
Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We are currently experiencing unprecedented times as a result of the COVID-19 pandemic, and our number one priority remains protecting the safety and security of our guests, team members and owners. We have also taken precautionary measures to protect our business, including securing our liquidity position. Given the strength of our system and dedication of our people, we believe we are well-positioned to navigate this crisis and ultimately recover stronger." With the exception of the Asia Pacific region, Hilton's first quarter results were not significantly impacted by the COVID-19 pandemic until March 2020, with occupancy roughly flat through February in the Americas and Europe, Middle East and Africa ("EMEA") regions.
As such, the results for the three months ended March 31, 2020 are not indicative of future results and the material negative impact that the COVID-19 pandemic is expected to have on Hilton's business for an indeterminate length of time. For the three months ended March 31, 2020, system-wide comparable RevPAR decreased 22.6 percent primarily as a result of decreases in occupancy, and management and franchise fee revenues decreased 18 percent. The decreases were due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete and partial suspensions of hotel operations at many of Hilton's properties. For the three months ended March 31, 2020, diluted EPS was $0.06 and diluted EPS, adjusted for special items, was $0.74 compared to $0.54 and $0.80, respectively, for the three months ended March 31, 2019. Net income and Adjusted EBITDA were $18 million and $363 million, respectively, for the three months ended March 31, 2020, compared to $159 million and $499 million, respectively, for the three months ended March 31, 2019.
Development
In the first quarter of 2020, Hilton opened 67 new hotels, totaling 8,800 rooms, and achieved net unit growth of over 6,100 rooms. Additionally, during the quarter, Hilton signed the largest multi-brand deal in company history with Resorts World Las Vegas for a 3,500 room resort uniting Hilton Hotels & Resorts, LXR Hotels and Resorts and Conrad Hotels and Resorts. As of March 31, 2020, Hilton's development pipeline totaled nearly 2,670 hotels consisting of more than 405,000 rooms throughout 120 countries and territories, including 35 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 223,000 rooms were located outside the U.S., and 213,000 rooms were under construction
Hilton Worldwide (NYSE:HLT) stock price history
The image below obtained from Google, shows Hilton Worldwide stock price for the last 5 years. And it's been an ok time for Hilton Worldwide stockholders. 5 years ago the stock of Hilton Worldwide was trading around $63.70 a stock and its currently trading at $71.90 That's a average return of 12.8% provided to Ball Corporation stockholders over the last 5 years.
The stock of Hilton Worldwide is trading a lot closer to its 52 week low of $44.30 than it is to its 52 week high of $115.48. This to us is a clear indication that the short term momentum and sentiment towards Hilton Worldwide stock is negative.
The stock of Hilton Worldwide is trading a lot closer to its 52 week low of $44.30 than it is to its 52 week high of $115.48. This to us is a clear indication that the short term momentum and sentiment towards Hilton Worldwide stock is negative.
Recent Google search trends for HLT stock price
The graphic below shows the trend in Google searches for Hilton stock price and HLT stock price over the last 12 months in the United States as obtained from Google Trends. The searches for Hilton stock price spiked in middle March probably due to the significant decline in Hilton's stock price due to the global sell off triggered by the Coronavirus pandemic. But the pandemic has hit the tourism and hospitality particularly hard.
Recent coverage of Hilton Worldwide
The extract below covers the latest earnings report from Hilton Worldwide as obtained from Finance.yahoo.com
Hilton Worldwide Holdings Inc. HLT reported first-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line beat estimates for the seventh straight quarter, the top line beat the consensus mark for the fourth successive quarter. Following the results, the company’s shares increased 4.5% in pre-market trading session. The company announced that its first-quarter results were materially impacted by the coronavirus pandemic. Hilton business is likely to reflect negative impact of the coronavirus pandemic in the second quarter.
Q1 in Detail
Hilton’s adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 45 cents but declined 7.5% on a year-over-year basis. Revenues totaled $1,920 million, which beat the consensus mark of $1,755 million. However, the reported figure declined 12.9% from the year-ago quarter. Both top and bottom lines were negatively impacted by the coronavirus outbreak.
Notably, Hilton opened 67 new hotels in first-quarter 2020. It also achieved net unit growth of roughly 6,100 rooms. As of Mar 31, 2020, Hilton's development pipeline comprised more than 2,670 hotels, with roughly 405,000 rooms across 120 countries and territories — including 35 countries and territories, where it currently does not have any running hotels. Moreover, 223,000 rooms in the development pipeline were located outside the United States and 213,000 were under construction.
Read the full article here
Hilton Worldwide Holdings Inc. HLT reported first-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line beat estimates for the seventh straight quarter, the top line beat the consensus mark for the fourth successive quarter. Following the results, the company’s shares increased 4.5% in pre-market trading session. The company announced that its first-quarter results were materially impacted by the coronavirus pandemic. Hilton business is likely to reflect negative impact of the coronavirus pandemic in the second quarter.
Q1 in Detail
Hilton’s adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 45 cents but declined 7.5% on a year-over-year basis. Revenues totaled $1,920 million, which beat the consensus mark of $1,755 million. However, the reported figure declined 12.9% from the year-ago quarter. Both top and bottom lines were negatively impacted by the coronavirus outbreak.
Notably, Hilton opened 67 new hotels in first-quarter 2020. It also achieved net unit growth of roughly 6,100 rooms. As of Mar 31, 2020, Hilton's development pipeline comprised more than 2,670 hotels, with roughly 405,000 rooms across 120 countries and territories — including 35 countries and territories, where it currently does not have any running hotels. Moreover, 223,000 rooms in the development pipeline were located outside the United States and 213,000 were under construction.
Read the full article here
Hilton Worldwide Holdings (NYSE: HLT) stock valuation
So based on Ball Corporation 1st quarter 2020 earnings report what do we value Ball Corporation stock at? Based on their earnings reported our valuation model provides a target price (full value price) for Ball Corporation at $46.30 a stock
We therefore believe that the stock of Ball Corporation is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $46.30. A good entry price into Ball Corporation would therefore be at $41.70 or below.
Since the stock of Ball Corporation is trading at well above our suggested entry point we rate the stock a sell and expect it to pull back to levels closer to our target price in coming weeks and months
We therefore believe that the stock of Ball Corporation is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $46.30. A good entry price into Ball Corporation would therefore be at $41.70 or below.
Since the stock of Ball Corporation is trading at well above our suggested entry point we rate the stock a sell and expect it to pull back to levels closer to our target price in coming weeks and months
Next earnings release of Hilton Worldwide
Hilton is expected to release their 2nd quarter 2020 earnings report in early August 2020