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Hilton (HLT) Beats Q1 Earnings Estimates, Raises '23 View

Hilton Worldwide Holdings Inc. HLT reported solid first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year. While the bottom line beat the consensus estimate for the sixth straight quarter, the top line surpassed the same for the eighth consecutive time.

Christopher J. Nassetta, president & CEO of Hilton, stated, "We carried strong momentum into 2023, exceeding the high end of our guidance for system-wide RevPAR, driving strong bottom-line results and delivering meaningful free cash flow available for return to our shareholders. As a result of our strong performance and positive outlook, we are raising our Adjusted EBITDA guidance for the full year."

Q1 in Detail

Hilton reported adjusted earnings per share (EPS) of $1.24, beating the Zacks Consensus Estimate of $1.14. In the prior-year quarter, the company reported an adjusted EPS of 71 cents.

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise

 

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

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Quarterly revenues of $2,293 million surpassed the Zacks Consensus Estimate of $2,262 million and increased 33.2% from the year-ago quarter’s levels. During the quarter, franchise and licensing fees increased 23% year over year. Owned and leased hotels, base and other management fees and incentive management fees rose 65.3%, 45.5% and 91.2% year over year, respectively.

RevPAR and Adjusted EBITDA

In the quarter under review, system-wide comparable revenue per available room (RevPAR) increased 30% year over year (on a currency-neutral basis), owing to an increase in occupancy and average daily rate. Also, RevPAR was up 8% from 2019 levels.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the first quarter was $641 million compared with $448 million reported in the prior-year quarter.

Balance Sheet

As of Mar 31, 2023, cash and cash equivalent balance (including restricted cash) amounted to $978 million compared with $1,286 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 4.51%.

During the quarter, the company repurchased 3.2 million shares of its common stock worth approximately $446 million.

The company declared a quarterly cash dividend of 15 cents per share. The dividend will be payable on (or before) Jun 30, to shareholders of record as of May 19, 2023.

Business Updates

During first-quarter 2023, Hilton opened 64 new hotels. It also achieved net unit growth of nearly 5,300 rooms. During the quarter, the company unveiled its 100th Tapestry Collection by Hilton. It also announced the opening of its 500th hotel in China.

As of Mar 31, 2023, Hilton's development pipeline comprised nearly 2,930 hotels, with nearly 428,100 rooms across 116 countries and territories — including 30 countries and territories where it currently has no running hotels. The pipeline includes the addition of the Waldorf Astoria Jaipur in India. For 2023, the company expects net unit growth in the range of 5-5.5%.

Outlook

For second-quarter 2023, the company anticipates net income in the range of $387-$401 million. Adjusted EBITDA is expected to be between $770 million and $790 million. The company expects second-quarter EPS (adjusted for special items) to be between $1.54 and $1.59.

For second-quarter 2023, the company anticipates system-wide RevPAR to increase between 10% and 12% on a year-over-year basis.

For 2023, the company anticipates net income in the range of $1,331-$1,385 million. Earlier, the company anticipated net income in the range of $1,382-$1,454 million. Adjusted EBITDA is expected to be between $2,875 million and $2,950 million. Earlier the company anticipated adjusted EBITDA to lie 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 $5.68-$5.88 compared with the previous projection of $5.42-$5.68. Full-year capital return is anticipated to be between $1.8 billion and $2.2 billion, up from the previous expectation of $1.7-$2.1 billion.

The company anticipates 2023 system-wide RevPAR to increase between 8% and 11% year over year compared with the previous projection of 4-8% range.

Zacks Rank & Key Picks

Hilton currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are Hilton Grand Vacations Inc. HGV, Crocs, Inc. CROX and PlayAGS, Inc. AGS.

Hilton Grand Vacations currently sports a Zacks Rank #1 (Strong Buy). HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 4.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.3% and 3.4%, respectively, from the year-ago period’s levels.

Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 123.5% in the past year.

The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.2% and 3.3%, respectively, from the year-ago period’s levels.

PlayAGS carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 133.3%, on average. The stock has declined 17.1% in the past year.

The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,873.3%, respectively, from the year-ago period’s estimated levels.

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