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Hilton (HLT) to Report Q1 Earnings: What's in the Cards?

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Hilton Worldwide Holdings Inc. (HLT - Free Report) is scheduled to report first-quarter 2021 results on May 5, before the opening bell. In the last reported quarter, the company reported a negative earnings surprise of 350%.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter bottom line is pegged at 5 cents, suggesting a deterioration of 93.2% from 74 cents reported in the prior-year quarter. The company’s earnings estimates for the current quarter have declined 16.7% in the past 30 days, reflecting analysts’ concern regarding the stock.

For revenues, the consensus mark is at $952.9 million, suggesting a decline of 50.4% from the year-ago quarter’s levels.

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 analyze the factors that are likely to make an impact this earnings season.

 

Factors at Play

The coronavirus pandemic is likely to have negatively impacted Hilton’s first-quarter 2021 performance. Notably, travel restrictions and re-imposed suspension of hotel operations in Europe along with stalled recoveries in Asia Pacific region is likely to have impacted first-quarter top line. Although RevPAR and occupancy rate are likely to have improved sequentially, it is likely to remain well below the pre-pandemic level. This along with high operating and fixed costs stemming from the pandemic are likely to have hurt margins in the to-be-reported quarter.

Moreover, dismal performance across the company’s Franchise and licensing fees, Incentive management fees as well as Base and other management fees is likely to get reflected in first-quarter top line.

The consensus estimate for Franchise and licensing fees is pegged at $225 million, indicating a decline of 33.6% from $339 million reported in the previous quarter. Incentive management fees are currently projected at $12.7 million, indicating a decline of 44.9% from $23 million in the year-ago quarter. Base and other management fees are estimated at $32.1 million, indicating a decline of 46.5% from $60 million in the year-ago quarter.

However, improved demand in the U.S. along with sequential upticks in business transient booking pace is likely to have aided the top line. This along with focus on digital traffic, unit expansion strategies, hotel conversions, new project developments, loyalty program and asset-light business model is likely to have contributed to the company’s performance in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Hilton this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. But that's not the case here.

Earnings ESP: Hilton has an Earnings ESP of -35.72%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

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

Choice Hotels International, Inc. (CHH - Free Report) has a Zacks Rank #3 and an Earnings ESP of +17.47%.

Caesars Entertainment, Inc. (CZR - Free Report) has a Zacks Rank #3 and an Earnings ESP of +1.69%.

Hyatt Hotels Corporation (H - Free Report) has a Zacks Rank #3 and an Earnings ESP of +7.29%.

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