Hilton (HLT) Q4 Earnings & Revenues Beat Estimates, Stock Up

Hilton Worldwide Holdings Inc. HLT reported solid fourth-quarter 2022 results, with both earnings and revenues beating the respective Zacks Consensus Estimate and rising year over year. While the bottom line beat the Zacks Consensus Estimate for the fifth straight quarter, the top line surpassed the same for the seventh consecutive time. Following the results, the company’s shares are up nearly 2% in pre-market trading session.

Christopher J. Nassetta, president & CEO of Hilton, stated, “Our fourth quarter and full year results surpassed our expectations, with fourth quarter system-wide RevPAR meaningfully exceeding the same period in 2019 driven by growth across all segments. This marked the second consecutive quarter that RevPAR exceeded pre-pandemic levels. Positive momentum has continued into the new year with exciting growth opportunities ahead, including the continued expansion of our brand portfolio with the recent launch of our newest brand, Spark by Hilton.”

Q4 in Detail

Hilton reported adjusted earnings per share (EPS) of $1.59, beating the Zacks Consensus Estimate of $1.20. In the prior-year quarter, the company reported an adjusted EPS of 72 cents.

Quarterly revenues of $2,444 million surpassed the Zacks Consensus Estimate of $2,337 million and increased 33.1% from the year-ago quarter’s levels. During the quarter, franchise and licensing fees increased 24.6% year over year. Additionally, Owned and leased hotels, base and other management fees as well as incentive management fees rose 46.7%, 57.2% and 68.4% year over year, respectively.

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise

 

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise

Hilton Worldwide Holdings Inc. price-consensus-eps-surprise-chart | Hilton Worldwide Holdings Inc. Quote

RevPAR and Adjusted EBITDA

In the quarter under review, system-wide comparable revenue per available room (RevPAR) increased 24.8% year over year (on a currency-neutral basis), owing to an increase in occupancy and average daily rate. Also, RevPAR was up 7.5% from 2019 levels.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the fourth quarter was $740 million compared with $512 million reported in the prior-year quarter.

Balance Sheet

As of Dec 31, 2022, cash and cash equivalent balance (including restricted cash) amounted to $1,286 million compared with $1,362 million reported in the previous quarter. The company reported long-term debt outstanding of $8.8 billion (sequentially flat), excluding deferred financing costs and discounts, with a weighted average interest rate of approximately 4.45%.

During the quarter, the company repurchased 3.8 million shares of its common stock worth approximately $501 million.

The company declared a quarterly cash dividend of 15 cents per share. The dividend will be payable on (or before) Mar 31, to shareholders of record as of Feb 28.

Business Updates

During fourth-quarter 2022, Hilton opened 108 new hotels. It also achieved net unit growth of nearly 15,100 rooms. During 2022, the company opened 355 new hotels totaling 58,200 rooms and achieved net unit growth of 48,300 rooms.

As of Dec 31, 2022, Hilton's development pipeline comprised nearly 2,820 hotels, with nearly 416,400 rooms across 118 countries and territories — including 30 countries and territories where it currently has no running hotels. For 2023, the company expects net unit growth to be in the range of 5-5.5%.

Outlook

For first-quarter 2023, the company anticipates net income in the range of $271-$287 million. Adjusted EBITDA is expected to be between $590 million and $610 million. The company expects first-quarter EPS (adjusted for special items) to be between $1.08 and $1.14.

For first-quarter 2023, the company anticipates system-wide RevPAR to increase between 23% and 27% on a year-over-year basis.

For 2023, the company anticipates net income in the range of $1,382-$1,454 million. Adjusted EBITDA is expected to be between $2,800 million and $2,900 million. General and administrative expenses for 2023 are now expected in the range of $390-$410 million.

The company expects 2023 EPS (adjusted for special items) in the range of $5.42-$5.68. Full-year capital return is anticipated to be between $1.7 billion and $2.1 billion.

The company anticipates 2023 system-wide RevPAR to increase between 4% and 8% on a year-over-year basis.

Zacks Rank & Key Picks

Hilton currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited OSW, Las Vegas Sands Corp. LVS and Manchester United plc MANU. While OneSpaWorld and Las Vegas Sands sport a Zacks Rank #1 currently, Manchester carries a Zacks Rank #2 (Buy).

OneSpaWorld has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 7.9% in the past year.

The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicate a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.

Las Vegas Sands has a long-term earnings growth rate of 4.9%. The stock has gained 23.2% in the past year.  

The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicate a rise of 100.8% and 217.5%, respectively, from the year-ago period’s estimated levels.  

Manchester has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of the company have gained 69.8% in the past year.  

The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicate a rise of 11.4% and 27.8%, respectively, from the year-ago levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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