The U.S. hotel industry is in the middle of a multi-year boom. In recent quarters, many hotel chains reported their strongest results in years, if not in company history. But now that the strong dollar is weighing on international revenue streams, can the world’s largest hotel chains keep up the momentum? Let’s find out by looking at the latest round of earnings announcements.
Hilton Worldwide (HLT): Q1 revenues climbed 10% year-on-year to $2.599 billion, topping the $2.41 billion consensus estimate. Net income rose 22% to $150 million. Adjusted earnings per share was $0.12, in line with estimates. Shares rose higher after the report; HLT is a B-rated (cautious) Buy.
Starwood Hotels (HOT): First-quarter profit was 28% lower than Q1 2014. However, adjusted earnings per share were $0.65, beating the $0.57 consensus estimate by 14%. Revenues declined 3% year-on-year to $1.42 billion, also topping the $1.39 billion consensus sales estimate. While HOT shares surged higher on the sales and earnings surprises, I wouldn’t add HOT just yet. Looking ahead to Q2, management expects earnings per share of $0.70 to $0.74. This is below the Street view of $0.79 EPS. HOT is a C-rated Hold.
Wyndham Worldwide Corp. (WYN): First-quarter net income rose 36% year-on-year to $122 million; adjusted earnings were $1.03 per share. Revenue climbed 6% to $1.26 billion. Analysts were looking for $0.92 EPS on $1.24 billion, so Wyndham posted a 12% earnings surprise and a 1.6% sales surprise. WYN shares rose modestly after the report. WYN is a B-rated (cautious) Buy.
Wyndham Worldwide Corp. (WYNN): For the first quarter, Wynn Resorts posted a net loss of $44.6 million, or a loss of $0.44 per share. Excluding special items, adjusted earnings were $0.70 per share; this missed the $1.33 consensus EPS estimate by a wide mile. Meanwhile, revenue also fell nearly 29% year-on-year to $1.09 billion. This also missed the consensus revenue estimate of $1.17 billion. WYNN shares plunged after the announcement; this stock earns an F-rating (Strong Sell) in Portfolio Grader.
Coming Up Next
In just a few hours, Marriott International (MAR) is scheduled to report its latest quarter results. Analysts are looking for $0.70 EPS on $3.59 billion in revenue. Compared with the year ago quarter this translates to 22.8% earnings growth and 9.0% sales growth. I expect Marriott to do even better. The consensus earnings estimate has been revised 6% higher in the past 90 days, and Marriott has a strong track record of earnings surprises. MAR is a B-rated Buy and is currently one of my top hotel stocks.
If you’d like to learn more about Marriott, and other buying opportunities this earnings season, I recommend it in my Blue Chip Growth newsletter. Click ahead for more details.
P.S. I will be speaking at the JW Marriott Atlanta in Atlanta, Georgia, on Tuesday, May 5. This seminar starts at 7 P.M. and you may attend at no cost, but please call 800-454-1395 to register. I will review where investors can achieve the highest yields in both bonds and stocks, as well my current market outlook, favorite stock picks and have an extensive question-and-answer session.