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Hilton (HLT) Gears Up for Q2 Earnings: What's in Store?

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Hilton Worldwide Holdings Inc. (HLT - Free Report) is scheduled to report second-quarter 2022 results on Jul 27, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 18.3%.

Q2 Estimates

The Zacks Consensus Estimate for the second-quarter bottom line is pegged at $1.06 per share, indicating an improvement of 89.3% from 56 cents reported in the year-ago quarter.

The consensus mark for revenues stands at $2 billion, suggesting growth of 50.6% from the prior-year quarter’s figure.

Factors to Note

Hilton’s second-quarter performance is likely to have benefited from a gradual increase in demand, loyalty program and unit expansion efforts. Strong leisure demand combined with improving transient business trends might have favored the company’s performance. Emphasis on unit expansion, luxury development strategy, hotel conversions, strategic partnerships and loyalty program bode well. Robust RevPAR in Europe, the Middle East and Africa region, thanks to easing travel restrictions and an increase in cross-border travel, is likely to have driven the to-be-reported quarter’s performance.

Strong contributions across the company’s Base and other management fees, Incentive management fees and Owned and leased hotels are likely to get reflected in the second-quarter top line. The Zacks Consensus Estimate for revenues from Base and other management fees is pegged at $74 million, indicating growth of 76.2% from $42 million reported in the prior-year quarter. Incentive management fees are currently projected at $45.5 million, suggesting an improvement of 116.7% from $21 million in the year-ago quarter. Revenues from Owned and leased hotels are pegged at $222 million, suggesting a rise of 83.5% from $121 million in the year-ago quarter.

However, high operating and fixed costs stemming from the pandemic are likely to have weighed on margins in the to-be-reported quarter. Although RevPAR is likely to have improved sequentially, it is likely to remain well below the pre-pandemic level.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Hilton this time around. 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.

Earnings ESP: Hilton has an Earnings ESP of 0.00%. 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.

Stocks Posed to Beat earnings

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:

MGM Resorts International (MGM - Free Report) has an Earnings ESP of +60.20% and a Zacks Rank #1.

Shares of MGM Resorts have declined 25.9% in the past year. MGM’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 212.5%.

Marriott International, Inc. (MAR - Free Report) has an Earnings ESP of +10.12% and a Zacks Rank #1.

Shares of Marriott have increased 0.9% in the past year. MAR’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 36.2%.

Choice Hotels International, Inc. (CHH - Free Report) has an Earnings ESP of +1.64% and a Zacks Rank #2.

Shares of Choice Hotels have inched up 0.3% in the past year. CHH’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 20.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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