Shares of Host Hotels & Resorts Inc. (HST) scaled a new 52-week high of $23.19 during the trading session on Tuesday, Jul 22. The closing price of $23.09 of this Zacks Rank #2 (Buy) stock represents a robust year-to-date return of over 21%. The average trading volume for the session was about 6.9 million shares.
Despite hitting its 52-week high, this lodging real estate investment trust (REIT) has plenty of upside left, given its solid portfolio of premium hotels as well as improving U.S. lodging-market fundamentals, particularly in the West Coast market.
Growth Drivers
Bethesda, MD-based Host Hotels, boasting a sturdy portfolio of luxury and upscale hotels, is well poised to deliver better results in the quarters ahead given the improving market fundamentals.
Particularly, in terms of Revenue Per Available Room (RevPAR), the west coast properties continued to experience sound results in the first quarter, driven by persistent business mix shift from contract to higher-rated transient and group business. Going forward, we expect the West Coast market to continue outperforming for the rest of the year on strong lodging demand and lower supplies. Hence, it remains a lucrative choice for the company.
Moreover, Host Hotels’s strategic portfolio-restructuring activities bode well for its long-term growth. Also, dividend hike for the 14th consecutive time boosted investors’ confidence in the stock. Its first-quarter 2014 adjusted funds from operations (FFO) per share exceeded the Zacks Consensus Estimate and the year-ago quarter figure backed by a rise in comparable hotel RevPAR, and food and beverage operations. We anticipate a continuation of this healthy trend.
Echoing similar sentiments, over the last 30 days three estimates moved up for both 2014 and 2015 FFO per share and there were no negative revisions. The Zacks Consensus Estimate for 2014 and 2015 FFO per share presently stands at $1.45 and $1.61 per share, respectively.
Further, Host Hotels is scheduled to release second-quarter earnings on Jul 31, before the opening bell. The Zacks Consensus Estimate for FFO per share is currently pegged at 43 cents.
The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.33%. This, along with a Zacks Rank #2, conclusively projects Host Hotels’ chance to beat the Zacks Consensus Estimate.
Notably, Host Hotels has an average earnings surprise of 4.94%, beating the Zacks Consensus Estimate in three out of the last four quarters.
Other Stocks Scaling Highs
Apart from Host Hotels, other REITs that have reached 52-week highs on Jul 22 include Cousins Properties Inc. (CUZ), Duke Realty Corp. (DRE) and Essex Property Trust Inc. (ESS).
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Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.
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