Hyatt Hotels Corporation H is set to report second-quarter 2015 results on Aug 4, before the market opens. Last quarter, the company posted a positive earnings surprise of 38.89%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Hyatt is progressing well backed by a strong expansion plan, significant international exposure, portfolio restructuring and RevPAR growth across segments. A gradual recovery in the economy, improved group demand and greater pricing power resulted in strong RevPAR.
Moreover, with a low supply growth environment and continued increase in demand, the leading hotelier will be able to raise the room rates, going forward. Given its property locations and strong brand recognition, we believe the company is well positioned to benefit from higher demand in the second quarter and beyond.
However, Hyatt’s extensive presence outside the U.S. makes it vulnerable to lingering political uncertainty, sluggish economy and other such issues in regions like China and Brazil. Meanwhile, currency headwinds persist which would hurt the RevPAR of the company. These factors would hurt revenues and profits of the company in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Hyatt Hotels is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Hyatt Hotels stands at 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate stand at 45 cents.
Zacks Rank: Hyatt Hotels’ Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Some stocks in the broader consumer discretionary sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
SeaWorld Entertainment, Inc. SEAS, with an Earnings ESP of +10.00% and a Zacks Rank #2.
The Madison Square Garden Company MSG, with an Earnings ESP of +4.76% and a Zacks Rank #2.
Skullcandy, Inc. SKUL, with an Earnings ESP of +50.00% and a Zacks Rank #2.
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