On Jul 9, 2013, Zacks Investment Research upgraded
Starwood Hotels & Resorts Worldwide
) to a Zacks Rank #1 (Strong Buy) ahead of its second-quarter
results due to be released later this month.
Why the Upgrade?
Starwood is expected to report its second-quarter earnings on
Jul 25, 2013. The Zacks Consensus Estimate for the upcoming
quarter is 73 cents, representing a year-over-year increase of
Starwood expects to post strong results in the upcoming
quarters of 2013 as it benefits from the gradual economic
recovery and emerging opportunities in the fast-growing
The White Plains, NY-based hotelier is focusing on rebalancing
its business in a fee-driven model. Its business is capital
efficient as the owner/developer partners provide the capital and
the company earns a fee for managing/franchising the hotel. This
fee-based business will help the company to increase its
profitability in the ensuing quarters.
Asset disposition is another strong point that will help
Starwood reduce earnings volatility and provide a more stable
growth profile. Starwood seeks to earn $3 billion in cash through
asset sale by 2016.
In 2013, Starwood expects to post earnings of $2.75-$2.83 per
share which represents growth of nearly 15% - 18% from 2012
earnings of $2.39 per share. The guidance was increased from
prior expectations of $2.59 - $2.68 at the first-quarter
conference call following better-than-expected first-quarter
results and management's unyielding faith in the company's future
The first-quarter 2013 earnings beat the Zacks Consensus
Estimate gaining from its margin expansion. This was the fourth
consecutive quarter of positive earnings surprise for Starwood
with an average beat of 19.23%. A share repurchase program will
also help drive earnings in 2013.
The Zacks Consensus Estimate for 2013 was $2.83 per share
which was at the higher end of the guidance range provided by
management. The estimate increased 5.6% over the last 90 days
representing a year-over-year increase of 8.4%. For fiscal 2014,
the Zacks Consensus Estimate is $2.97 per share, which has
increased 0.3% over the last 60 days indicating a year-over-year
improvement of 4.8%.
STARWOOD HOTELS (HOT): Free Stock Analysis
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