The global hospitality industry has suffered significant losses during the pandemic as the hospitality industry is one of the hardest hit sectors. Many businesses have been forced to close in the past two years, causing thousands of people to lose their jobs. Additionally, the recent omicron gap crushed the hotel industry’s slight recovery early last year.
Given the rapid mutating capabilities of the virus, it is difficult to predict when the pandemic will end. Additionally, with rising geopolitical tensions, international travel is expected to remain weak in the near term.
In this environment, it might be prudent to avoid the significantly overvalued hotel stocks Marriott International, Inc. (MAR), Hilton Worldwide Holdings Inc. (HLT), and Hyatt Hotels Corporation (H) now. Wall Street analysts expect these stocks to crash in the near term.
Marriott International, Inc. (MAR)
MAR operates, franchises and licenses hotel, residential and timeshare properties worldwide. Its segments include the United States and Canada; and International. Currently, the company operates approximately 7,989 properties under 30 hotel brands in 139 countries and territories.
MAR’s total revenue increased 104.7% year-over-year to $4.45 billion for the fiscal fourth quarter ended December 31, 2021. However, its total expenses were 3, $81 billion, compared to $2.30 billion for the previous period. Additionally, his net earnings and other income fell 33.3% year-over-year to $4 million. Its interest income also fell 14.3% year-over-year to $6 million.
In terms of before EV/S, the MAR of 3.57x is 175.6% higher than the industry average of 1.30x. Additionally, its advanced P/S of 3.05x is 184.3% better than the industry average of 1.07x.
MAR closed yesterday’s trading session at $178.17. Additionally, Wall Street analysts expect the stock to hit $177.58 in the near term, indicating a potential marginal decline.
March POWR Rankings reflect his poor outlook. POWR ratings rate stocks on 118 different factors, each with its own weighting.
The stock has a D rating for value. Click on here to access additional POWR ratings for MAR (Momentum, Growth, Stability, Sentiment and Quality). MAR is ranked #8 out of 21 stocks in the D rating Travel – Hotels/Resorts industry.
Hilton Worldwide Holdings Inc. (HLT)
HLT, a hotel company, owns, leases, manages, develops, franchises hotels and resorts. It operates through two segments, Management and Franchise, and Property, and has approximately 6,800 properties with 1 million rooms in 122 countries and territories.
HLT’s total revenue increased 106.3% year-over-year to $1.84 billion for the fourth quarter ended December 31, 2021. However, its total expenses were $1.50 billion, compared to $1.08 billion for the previous period. Additionally, its other net non-operating income fell 61.1% year over year to $7 million.
In terms of forward EV/S, HLT’s 6.41x is 395.2% better than the industry average of 1.30x. Additionally, its forward P/S of 5.36x is 400.3% above the industry average of 1.07x.
HLT has missed its EPS estimates in three of the past four quarters. It is down 1.9% year-to-date to close yesterday’s session at $153.04. Additionally, Wall Street analysts expect the stock to hit $150.69 in the near term, indicating a potential downside of 1.5%.
HLT’s POWR ratings reflect its poor outlook. The stock has a D rating for value.
We also rated it for growth, momentum, stability, sentiment, and quality. Click on here to access all HLT ratings. It is ranked #12 in the same industry.
Hyatt Hotels Corporation (H)
H operates as a hospitality company in the United States and internationally. It operates through four segments: Owned and Leased Hotels; management and franchising of the Americas; ASPAC management and franchising; and EAME/SW Asia Management and Franchising.
H’s total revenue increased 153.8% year-over-year to $1.08 billion for the fourth quarter ended December 31, 2021. However, its other direct costs increased $226.7 % year over year to reach $49 million. Its other loss was $53 million, compared to income of $22 million a year ago.
In terms of EV/Sales Futures, the H of 2.08x is above the industry average of 1.30x by 60.7%. Additionally, its advanced P/S of 1.97x is 84.2% better than the industry average of 1.07x.
H has missed EPS estimates in three of the last four quarters. It closed yesterday’s trading session at $102.10. Wall Street analysts expect the stock to hit $97.47 in the near term, indicating a potential drop of 4.5%.
The POWR ratings of H are consistent with this grim outlook. The stock has an overall D rating equivalent to Sell in our POWR rating system. It has a D rating for value, stability, and sentiment.
We also rated H for Growth, Momentum and Quality. Click on here to access all of H’s ratings. H is ranked #18 in the same sector.
MAR shares were trading at $175.93 per share on Friday afternoon, down $2.24 (-1.26%). Year-to-date, MAR has gained 6.47%, compared to a -8.63% rise in the benchmark S&P 500 over the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentary. Continued…