Hilton's (HLT) Q3 Earnings to Benefit From Solid RevPAR

Hilton Worldwide Holdings Inc. HLT is scheduled to report third-quarter 2019 results on Oct 23, before the opening bell. In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 5% and 1.6%, respectively. Moreover, the bottom and the top line rose 23.3% and 8.4%, respectively, on year-over-year basis in the same period.

How are Estimates Faring?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.02, which suggests a rise from 77 cents reported in the year-ago quarter. Notably, the company’s earnings estimate for the quarter has been stable in the past 30 days.  The consensus mark for revenues is pegged at nearly $2,378 million, which calls for a 5.8% increase from the prior-year quarter’s reported figure.

Hilton Worldwide Holdings Inc. Price and EPS Surprise


Hilton Worldwide Holdings Inc. Price and EPS Surprise

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

Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.

Factors at Play

The company’s focus on unit expansion plans, robust loyalty program and strong revenue per available room (RevPAR) as well as average daily rate (ADR) growth has most likely driven the top line in the third quarter. The Zacks Consensus Estimate for the company’s third-quarter RevPAR suggests an increase of 0.9%. Also, system-wide ADR is expected to increase 0.7% year over year.

Moreover, robust performance by the company’s new brands including Home2 Suites, Tru by Hilton, Tapestry Collection are likely to show on third-quarter results.

Additionally, the company’s Franchise and licensing fees as well as Base and other management fees are likely to have contributed in the to-be-reported quarter. However, Incentive management fees are likely to have been an overhang.

This is clearly evident from the Zacks Consensus Estimate for third-quarter metrics. The consensus estimate for Franchise and licensing fees is pegged at $446 million, which suggests a 9.6% rise from the year-ago period. Also, the consensus mark for Base and other management fees suggests an increase of 2.5% year over year to $82 million. However, Incentive management fees is likely to remain flat year over year.

What Does the Zacks Model Unveil?

Our proven model does not conclusively predict an earnings beat for Hilton this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hilton carries a Zacks Rank #3 and an Earnings ESP of -1.47%.

Stocks With Favorable Combinations

Here are some stocks from the Consumer Discretionary sector that investors may consider as our model shows that these have the right combination of elements to post earnings beat in this quarter:

Hasbro, Inc HAS has an Earnings ESP of +1.44% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Melco Resorts & Entertainment Limited MLCO currently has an Earnings ESP of +2.44% and a Zacks Rank #3.

Las Vegas Sands Corp LVS has an Earnings ESP of +0.19% and a Zacks Rank #3 at present.

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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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