Leisure Demand & Expansion to Aid Hyatt's (H) Q1 Earnings

Earnings Report and Estimates - Hyatt Hotels Corporation is scheduled to report first-quarter 2024 results on May 9, with a previous earnings surprise of 68.4% in the last reported quarter [1] - The Zacks Consensus Estimate for first-quarter EPS is 73 cents, indicating a 78.1% improvement from 41 cents in the year-ago quarter [2] - Revenue consensus is approximately $1.72 billion, suggesting a 2.4% increase from the year-ago quarter [2] Performance Drivers - Hyatt's first-quarter 2023 performance is expected to benefit from robust leisure and business transient demand, expansion initiatives, and loyalty programs [3] - Comparable systemwide hotels' RevPAR is expected to increase 6.2% year over year to$ 138.6, with average daily rate and occupancy rates increasing 0.1% to $202.4 and 400 basis points to 68.5%, respectively [3] - The World of Hyatt loyalty program is enhancing its offerings, which is anticipated to increase room night penetration and make Hyatt's brands more appealing to property owners [4] Expansion and Strategy - Hyatt is expanding its market reach and accommodating various price ranges, which stimulates loyalty membership and attracts hotel developers and owners [5] - The company expects first-quarter total managed and franchised properties to increase 7.7% year over year to 1,485 [5] - Hyatt sold 80% of its Unlimited Vacation Club (UVC) business for$ 80 million but will maintain management responsibilities, with forecasts suggesting management and royalty fees will exceed $60 million for the rest of 2024 [6] Earnings Model and Valuation - The Zacks model predicts an earnings beat for Hyatt, with an Earnings ESP of +13.79% and a Zacks Rank of 3 [7][8] - Hyatt's shares have surged by 43.8% in the past six months, outperforming the industry gain of 24.9% [9] - The stock is currently trading at 41.94X forward 12-month price-to-earnings, compared to 23.95X for the Zacks sub-industry and 16.66X for the Zacks sector [9] Other Stocks with Earnings Potential - Funko, Inc. (FNKO) has an Earnings ESP of +6.90% and a Zacks Rank of 2, with expected earnings increase of 40.8% for the to-be-reported quarter [11] - Fox Corporation (FOXA) has an Earnings ESP of +2.98% and a Zacks Rank of 3, with expected earnings increase of 4.3% for the to-be-reported quarter [11] - Choice Hotels International, Inc. (CHH) has an Earnings ESP of +0.44% and a Zacks Rank of 3, with expected earnings increase of 2.7% for the to-be-reported quarter [12]