Host Hotels & Resorts Inc. (
a real estate investment trust (REIT), is scheduled to report third
quarter 2012 earnings results on October 10, 2012. The current
Zacks Consensus Estimate for the quarter is 21 cents, representing
a year-over-year growth of 28.1%.
Second Quarter Recap
Host Hotels reported second quarter 2012 FFO (funds from
operations) of $246 million or 32 cents per share compared with
$221 million or 30 cents per share in the year-earlier quarter.
Reported FFO missed the Zacks Consensus Estimate by a penny.
Adjusted FFO in the reported quarter was $261 million or 34
cents per share versus $227 million or 31 cents per share in the
Total revenue increased 6.5% year over year to $1,368 million
from $1,284 million and exceeded the Zacks Consensus Estimate of
$1,363 million.The increase in revenue was driven by solid
performance of the company's owned hotels and improvements in
comparable food and beverage revenues.
Agreement of Analysts
In the last seven days, none of the analysts have revised their
earnings estimate upwards for 2012 and 2013 although two analysts
have each revised them down for both the years. This signifies that
the analysts are skewed towards a negative direction.
Magnitude of Estimate Revisions
For full-year 2012, the company expects adjusted FFO in the
range of $1.04 to $1.09 per share. The Zacks Consensus Estimates
for 2012 have decreased over the last seven days from $1.08 per
share to $1.07. For 2013, the Zacks Consensus Estimates have
remained steady over the last seven days at $1.27 per share. This
signifies that the analysts are cautious about the long term
performance of the company.
Host Hotels is the largest lodging REIT with high-quality
lodging assets in geographically diverse locations. Over the years,
the company has executed a focused and disciplined long-term
strategic plan to acquire high quality lodging assets, which have
the potential for significant capital appreciation. This provides
significant upside potential for the company.
Host Hotels maximizes the value of its existing portfolio
through aggressive asset management, and works diligently with the
managers of its hotels to reduce operating costs and increase
revenues, and conducts selective capital improvement and expansion
designed to improve operations.
However, the acquisition spree of Host Hotels involves
significant upfront operating expenses with limited near-term
profitability. New hotels usually take time to generate revenues,
and will continue to drag margins till they are established.
Host Hotels currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. One of its
LaSalle Hotel Properties (
holds a Zacks #4 Rank, which translates into a short term Sell
Note: Funds from operations, a widely used metric to gauge
the performance of REITs, is obtained after adding depreciation
and amortization and other non-cash expenses to net income.
HOST HOTEL&RSRT (HST): Free Stock Analysis
LASALLE HTL PRP (LHO): Free Stock Analysis
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