Hilton (HLT) Q4 Earnings: What's in Store for the Stock?

Hilton Worldwide Holdings Inc.HLT is set to report fourth-quarter and full-year 2016 results on Feb 15, before market opens.

Last quarter, this leading global hospitality company posted in-line earnings. It has recorded an average positive surprise of 0.6% in the trailing four quarters. Meanwhile, on the revenue front, Hilton missed the Zacks Consensus Estimate twice in the trailing four quarters.

Let's see how things are shaping up for this announcement.

Hilton Worldwide Holdings Inc. Price and EPS Surprise

Hilton Worldwide Holdings Inc. Price and EPS Surprise | Hilton Worldwide Holdings Inc. Quote

Factors to Consider

Hilton Worldwide saw growth in its system-wide revenue per available room (RevPAR) in the third quarter, primarily owing to rate and strong group business. The company's geographic exposure, solid transient business as well as improving group business trends are expected to continue driving RevPAR in the fourth quarter too.

Notably, system-wide RevPAR growth is expected to be flat to modestly up on a comparable and currency neutral basis in the fourth quarter. Further, adjusted earnings are projected to be between 20 cents and 23 cents and adjusted EBITDA (Earnings before Interest, Tax, Depreciation, and Amortization) is expected in the range of $736 million to $776 million.

Hilton also expects to have driven additional value as well as achieved meaningful tax and capital market efficiencies as it completed the spin-off of Park Hotels & Resorts and Hilton Grand Vacations in the to-be-reported quarter.

However, prior quarter results were tampered by softer-than-expected corporate transient business, weakness in oil and gas markets, political instability and terrorism in some countries as well as adverse currency impacts. According to management, all of these are likely to have continued into the to-be-reported quarter as well.

Moreover, management notes that the unfavorable October calendar shift and the fact that November and December are typically low group months, could result in softness in transient growth, thereby weighing on the top line.

Earnings Whispers

Our proven model does not conclusively show that Hilton is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Hilton's Earnings ESP is +6.15%. This is because the Most Accurate Estimate stands at 69 cents, while the Zacks Consensus Estimate is pegged lower at 65 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Hilton has a Zacks Rank #5 (Strong Sell).

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some hotel companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Extended Stay America, Inc. STAY has an Earnings ESP of +21.43% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Hyatt Hotels Corporation H has an Earnings ESP of +12.5% and a Zacks Rank #3.

Marriott International, Inc. MAR has an Earnings ESP of +2.41% and a Zacks Rank #3.

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Marriott International (MAR): Free Stock Analysis Report

Hyatt Hotels Corporation (H): Free Stock Analysis Report

Extended Stay America, Inc. (STAY): Free Stock Analysis Report

Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report

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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.

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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