With the Q2 earnings season in its last leg, the widely diversified Consumer Discretionary sector has grabbed much of the spotlight.
Notably, per our latest earnings preview article, the sector has witnessed earnings growth of 4.1% (as of Jul 29). The growth rate with respect to the top line for 48.6% of the Consumer Discretionary companies is in the positive territory -- 1.9%. Also, the beat ratios for this sector have been impressive as well (88.2% for earnings and 47.1% for revenues).
Hotel Stocks in Focus
Turning our focus on hotel stocks from the sector, we note that a number of companies have reported mixed results so far this earnings season.
Though increasing travel demand and higher transaction volumes are boosting Q2 results, decline in occupancy levels, negative currency translation, pockets of geopolitical instability and economic slowdown are denting profits.
Among the hotel stocks that have already reported, Marriott International Inc. (NASDAQ:MAR) posted solid second-quarter 2016 results.
Meanwhile, Wyndham Worldwide Corporation (NYSE:WYN) posted mixed results for the second quarter of 2016, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same. Hilton Worldwide Holdings Inc. (NYSE:H) too posted mixed results as it missed the consensus estimate for earnings while revenues were in line with the mark.
On the other hand, Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) missed the Zacks Consensus Estimate for both earnings and revenues.
A number of hotel companies are set to report their quarterly numbers on Aug 2. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:
Hyatt Hotels Corporation (NYSE:H) posted a positive earnings surprise of 4.17% last quarter. However, the trailing four-quarter average earnings surprise stands at a negative 3.57%.
HYATT HOTELS CP Price and EPS Surprise
HYATT HOTELS CP Price and EPS Surprise | HYATT HOTELS CP Quote
For the second quarter, the company has an Earnings ESP of +4.35% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter’s earnings is pegged at 46 cents.
Improved transient demand and greater pricing power have been driving RevPAR over the past few quarters. We expect the trend to continue in Q2. However, lingering global uncertainties coupled with negative currency translation is likely to limit top-line growth (read more: Hyatt Hotels Q2 Earnings: Disappointment in the Cards?).
Choice Hotels International Inc. (NYSE:H) registered a 7.89% negative earnings surprise in the previous quarter. However, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 0.42%
CHOICE HTL INTL Price and EPS Surprise
CHOICE HTL INTL Price and EPS Surprise | CHOICE HTL INTL Quote
The company has an Earnings ESP of 0.00% and a Zacks Rank #4 for the second quarter. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 67 cents.
La Quinta Holdings Inc. (NYSE:LQ) recorded a positive earnings surprise of 12.50% in the preceding quarter. In fact, the company outpaced/met the Zacks Consensus estimate in three of the past four quarters, with an average beat of 1.88%.
LA QUINTA HLDGS Price and EPS Surprise
LA QUINTA HLDGS Price and EPS Surprise | LA QUINTA HLDGS Quote
The company has an Earnings ESP of -5.00% and a Zacks Rank #3 (Hold) for the second quarter. The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 20 cents per share.
Last quarter, Red Lion Hotels Corporation (NYSE:H) recorded a negative earnings surprise of 7.69%. However, the company posted positive earnings surprises in two of the past four quarters, with an average beat of 13.44%.
RED LION HOTELS Price and EPS Surprise
RED LION HOTELS Price and EPS Surprise | RED LION HOTELS Quote
The company has an Earnings ESP of +100.00% and a Zacks Rank #3 for the second quarter. The Zacks Consensus Estimate for the quarter is pegged at a loss of 1 cent per share.
Don’t miss out on our full earnings release articles for these stocks, as the actual results might hold some surprises!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
STARWOOD HOTELS (HOT): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
HYATT HOTELS CP (H): Free Stock Analysis Report
RED LION HOTELS (RLH): Free Stock Analysis Report
CHOICE HTL INTL (CHH): Free Stock Analysis Report
LA QUINTA HLDGS (LQ): Free Stock Analysis Report
HILTON WW HLDG (HLT): Free Stock Analysis Report
Original post
Zacks Investment Research