Hilton (HLT) To Report Q3 Earnings: Disappointment In Store?

Hilton Worldwide Holdings Inc. (NYSE:HLT) is set to report third-quarter 2016 results on Oct 26, before market opens.

Last quarter, this leading global hospitality company posted a positive earnings surprise of 3.85%. The hotelier delivered positive earnings surprise only once in the past four quarters, with an average positive surprise of 0.6%. However, on the revenue front, Hilton has missed the Zacks Consensus Estimate only once in the trailing six quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Hilton Worldwide saw strong system-wide revenue per available room (RevPAR) in the second quarter, primarily owing to immense growth in the Middle East & Africa region, and the trend is expected to have continued in the to-be-reported quarter. Hilton’s geographic exposure, solid transient business as well as its improving group business trends should continue to drive RevPAR.

System-wide RevPAR growth is expected to be in the range of 2% to 4% on a comparable and currency neutral basis in the third quarter.

For the to-be-reported quarter, adjusted earnings are projected to be between 21 cents and 23 cents. Adjusted EBITDA is expected to be in a range of $760 million to $780 million.

However, Hilton’s international presence makes it vulnerable to lingering political uncertainties and economic downturns in certain parts of the world. Unfavorable currency translations could continue to hurt the top line.

HILTON WW HLDG Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Hilton Worldwide is likely to beat earnings this quarter. This 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: Hilton’s Earnings ESP is 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 23 cents.

Zacks Rank: Hilton has a Zacks Rank #4 (Sell).

As it is 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.

Stocks to Consider

Here are some companies in the broader consumer discretionary sector to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation (NYSE:BYD) has an Earnings ESP of +16.67% and a Zacks Rank #2.

Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) has an Earnings ESP of +12.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carmike Cinemas, Inc. (NYSE:LYV) has an Earnings ESP of +100.00% and a Zacks Rank #3.

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