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Hotel company Hilton (NYSE:HLT) fell short of the market’s revenue expectations in Q3 CY2024, but sales rose 7.3% year on year to $2.87 billion. Its non-GAAP profit of $1.92 per share was 4.3% above analysts’ consensus estimates.
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Hilton (HLT) Q3 CY2024 Highlights:
- Revenue: $2.87 billion vs analyst estimates of $2.91 billion (1.3% miss)
- Adjusted EPS: $1.92 vs analyst estimates of $1.84 (4.3% beat)
- EBITDA: $904 million vs analyst estimates of $887.1 million (1.9% beat)
- Management reiterated its full-year Adjusted EPS guidance of $6.98 at the midpoint
- EBITDA guidance for the full year is $3.39 billion at the midpoint, in line with analyst expectations
- Gross Margin (GAAP): 90%, up from 88.7% in the same quarter last year
- EBITDA Margin: 31.5%, in line with the same quarter last year
- RevPAR: $121.40 at quarter end, in line with the same quarter last year
- Market Capitalization: $58.68 billion
Company OverviewFounded in 1919, Hilton Worldwide (NYSE:HLT) is a global hospitality company with a portfolio of hotel brands.
Travel and Vacation Providers
Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.Sales Growth
A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Hilton’s 3.3% annualized revenue growth over the last five years was sluggish. This shows it failed to expand in any major way and is a rough starting point for our analysis.We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or emerging trend. Hilton’s annualized revenue growth of 16.1% over the last two years is above its five-year trend, suggesting some bright spots.
Hilton also reports revenue per available room, which clocked in at $121.40 this quarter and is a key metric accounting for daily rates and occupancy levels. Over the last two years, Hilton’s revenue per room averaged 9.3% year-on-year growth. Because this number is lower than its revenue growth, we can see its sales from other areas like restaurants, bars, and amenities outperformed its room bookings.
This quarter, Hilton’s revenue grew 7.3% year on year to $2.87 billion, missing Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and shows the market thinks its products and services will face some demand challenges.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.Hilton has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 16.4% over the last two years, quite impressive for a consumer discretionary business.