Playa Hotels & Resorts and Range Resources have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 6, 2023 – Zacks Equity Research shares Playa Hotels & Resorts PLYA as the Bull of the Day and Range Resources Corp. RRC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on State Street STT, Everest Re Group RE and AssetMark Financial AMK.
Here is a synopsis of all five stocks.
Bull of the Day:
Playa Hotels & Resorts is coming off its best year ever in 2022 with bookings remaining red hot to start 2023. This Zacks Rank #1 (Strong Buy) is leaving the pandemic behind.
Playa Hotels & Resorts develops and operates 25 all-inclusive resorts in Mexico, Jamaica and the Dominican Republic with 9,352 rooms. If you've ever been to the beach destinations in those three countries you know their resorts.
In Mexico, Playa owns and manages Hyatt Zilara Cancún, Hyatt Ziva Cancún, Wyndham Alltra Cancún, Wyndham Alltra Playa del Carmen, Hilton Playa del Carmen All-Inclusive Resort, Hyatt Ziva Puerto Vallarta, and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall, Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Grande Montego Bay Resort & Spa and Jewel Paradise Cove Beach Resort & Spa.
In the Dominican Republic, Playa owns and manages the Hilton La Romana All-Inclusive Family Resort, the Hilton La Romana All-Inclusive Adult Resort, Hyatt Zilara Cap Cana, Hyatt Ziva Cap Cana and Jewel Punta Cana. Playa owned one resort in the Dominican Republic that was managed by a third-party until January 6, 2023 but is now managed by Playa.
It also manages 8 resorts on behalf of third-party owners.
A Big Beat in the Fourth Quarter
Analysts have underestimated the consumer demand for travel. On Feb 23, Playa Hotels & Resorts reported its fourth quarter and full year results and blew by the Zacks Consensus by $0.14. Earnings were $0.13 versus the Zacks Consensus of a loss of $0.01.
It was the fourth earnings beat in a row.
Playa had the best year in the company's history and saw acceleration in recovery in the important Jamaica market.
Net Package RevPAR was up 21.8% in the fourth quarter to $262.73 from $215.66. For the full year, Net Package RevPAR jumped 67% to $266.93 from $159.88, as Caribbean destinations like Jamaica fully reopened to visitors and COVID testing was eliminated.
Fourth quarter comparable portfolio occupancy was up 9.7 points to 75.8% from 66.1% in Q4 2021. This did not include Hilton La Romana, Hyatt Ziva and Hyatt Zilara Cap Cana which were closed for a portion of the quarter due to impacts of Hurricane Fiona and subsequent clean-up.
Full year comparable occupancy was up 21.7 points to 74.9% from 53.2% as the Caribbean reopened fully from the pandemic restrictions.
"Demand has remained robust so far in 2023, with our weekly bookings for our Playa owned and managed resorts reaching new highs," said Bruce Wardinski, CEO.
"Our revenue on the books for the first half of 2023 at our Playa owned and managed resorts, excluding the recently repositioned Jewel Punta Cana and Jewel Palm Beach, is up over 30%, with ADR growth driving roughly one-third of the increase. Early indications for the summer also look fantastic, with ADR continuing to show year-over-year growth," he added.
Estimates for 2023 Raised
After the bullish guidance for 2023, analysts raised earnings estimates for the full year. The 2023 Zacks Consensus Estimate has jumped to $0.49 from $0.44 just 60 days ago. However, this is still a penny under 2022's earnings of $0.50.
But analysts see 2024 as even more bullish, with earnings expected to grow 22.5% to $0.60.
Shares Soar in 2023
Shares of Playa Hotels & Resorts were originally a pandemic winner in 2021 as the trends in travel improved off the COVID pandemic lows. However, shares sold off again in 2022. The company, however, thought they were attractive and undervalued. The Board of Directors authorized a $100 million share buyback in Sep 2022.
As of Jan 31, 2023, there was $43.6 million remaining on that authorization. But on Feb 9, 2023, the Board of Directors authorized a new $200 million share repurchase, replacing what was left on the Sep 2022 authorization.
Shares have soared 44.6% year-to-date and are near new 52-week highs. It's not as cheap, on a P/E basis, as it once was. It trades with a forward P/E of 19.3.
But for investors who believe the travel trend is going to stick around for the next few years, you might want to keep an all-inclusive player in the Caribbean, like Playa Hotels & Resorts, on your short list.
Bear of the Day:
Range Resources Corp. had a record 2022 as natural gas prices soared. But earnings are expected to decline for this Zacks Rank #5 (Strong Sell) in 2023 as natural gas prices fall.
Range Resources is an independent natural gas and NGL producer with operations focused on stacked-pay projects in the Appalachian Basin.
Another Beat in the Fourth Quarter 2022
On Feb 27, Range Resources reported its fourth quarter and full year 2022 results. It beat on the Zacks Consensus Estimate by $0.18 reporting $1.30 versus the consensus of $1.12
For the full year, Range Resources saw record cash from operations of $1.9 billion. Like many energy companies, it returned much of the free cash flow to shareholders in the form of $39 million in dividends, $400 million in share repurchases and $1.1 billion in debt reduction.
The key for the energy producers is the 2023 production and the capital guidance plan. It's all-in 2023 capital budget is expected to be $570 to $615 million planned to maintain production at 2.12 to 2.16 Bcfe per day.
Range's all-in maintenance capital is expected to be approximately $0.76 per mcfe, among the lowest of the US natural gas producers.
Range also increased hedge positions for 2023 and 2024 to approximately 55% and 35% of natural gas production with weighted-average floors of $3.57 and $3.75 per MMBtu, respectively.
"As we enter 2023, the progress made during the past year both financially and operationally puts Range in the strongest position in Company history," said Jeff Ventura, CEO.
Analysts Cut Full Year Earnings Estimates
Over the last 60 days, 9 estimates have been cut pushing the Zacks Consensus down to $3.21 from $4.89 during that time. That is an earnings decline of 37.2% from 2022 as the company made $5.11 in 2022.
But 2022 was also a record year.
Shares are up in 2023
Shares have been on a roller coaster over the last year. They're up just 3.1% during that time. But they have rallied in 2023, running up 11.6%.
They're still cheap with a forward P/E of 8.7. And it has a PEG ratio of 0.3. A PEG ratio under 1.0 usually indicates a company has both growth and value.
Range Resources dividend is currently yielding 1.2%.
While Range Resources has a Strong Sell recommendation because of the earnings estimates cuts, it's still cheap. It might be one to keep on the short list for when the Rank changes.
3 Top Stocks to Gain as Interest Rates Stay Higher for Longer
The recent strength in the U.S. labor market has confirmed that the Federal Reserve will have to do more to curb inflationary pressure. For the week ending Feb 25, Americans filing for jobless benefits dropped to 190,000, less than the 195,000 estimated. New unemployment applications remained below the coveted 200,000 mark for the seventh successive week, indicating sustained resilience in the labor market.
By the way, January’s employment report has already remained astounding all around. In January, jobs added were 517,000, way more than analysts’ forecast of 187,000 job gains. Job additions were already healthy in the latter half of 2022, eventually leading to the unemployment rate declining to 3.4% in January, its lowest level since 1969.
However, signs of strength in the labor market may lead to an uptick in consumer outlays, increasing price pressures, and compelling the Fed to raise interest rates through summer. Anyhow, the prices of indispensable commodities still remain elevated.
The Fed’s preferred inflation gauge, the personal consumption expenditure (PCE) index, increased by 0.6% in January from December’s increase of 0.2%. What’s more, the PCE index jumped 5.4% annually in January from December’s reading of 5.3%, and all the readings came in higher than expected.
Nonetheless, the minutes from the Fed’s latest meeting showed that most of the policymakers want to raise interest rates soon to curb inflationary pressure. Market participants now expect the central bank to raise interest rates by 25 basis points in March in addition to May. This will push the policy rate to 5.36% by mid-summer, and many analysts expect the rate to remain at that level for 2023.
But rate hikes do not necessarily bode well for the broader stock market as it impacts consumer spending habits, increases borrowing costs and hampers economic growth. Still, some stocks tend to gain from a hawkish interest rate environment. Notable among them are stocks from the financial sector, including banks, insurance, and asset management companies.
Banks make more money when interest rates scale upward since the spread between what banks earn by investing and pay to customers increases. Similarly, rising interest rates increase the profit margins of insurance players and wealth management companies.
Thus, we have selected three fundamentally solid stocks from the financial sector that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
State Street primarily performs its business through its principal banking subsidiary, State Street Bank. Currently, State Street has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 7.4% over the past 60 days. STT’s expected earnings growth rate for the current year is 16.2%. Its shares are estimated to gain 8.9% next year.
Everest Re Group writes property and casualty, reinsurance, and insurance in the U.S., Bermuda, and international markets. Presently, Everest Re Group has a Zacks Rank #1 and a VGM Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 13.4% over the past 60 days. RE’s expected earnings growth rate for the current year is almost 70%. Its shares are expected to advance 15.7% next year.
AssetMark Financial provides wealth management and technology solutions to financial advisers and their clients. Currently, AssetMark Financial has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 12.2% over the past 60 days. AMK’s expected earnings growth rate for the current year is 24.3%. Its shares are projected to increase by 6.4% next year.
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Playa Hotels & Resorts N.V. (PLYA) : Free Stock Analysis Report
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