Shares of RCL are down 23% since the peak back in January, and its forward P/E multiple has contracted by 28% from 15.2x to 10.9x mostly due to rising oil/USD and concerns about future supply growth. RCL has undeservedly been hit the hardest in the group, in our view, which we attribute to more exposure to the Caribbean. We think RCL’s valuation has created a very attractive risk/reward and we have three charts to illustrate our view.
Search Coverage List, Models & Reports
Search Results1-10 out of 61
We looked at stock ownership for CEOs in our coverage and compared the results to other CEOs in the S&P 500. We also looked at prior periods of open market purchases by C-Level executives, and both charts are shown below. We believe stock ownership is the single best form of shareholder alignment. When executives take this a step further and use their own capital to buy stock in the open market – rather than just accumulating stock options – it’s even more bullish, as executives at that point are also confident enough in the direction of the business based on forward data that only they can see.
May TravelClick data was released this morning (5/31/2018) and showed firm and stable trends in NTM combined bookings/rates in the top 25 North American markets. The average NTM revenue y/y of the three segments was up 4.6% versus 4.2% last month, and the 4.6% is also the highest growth rate of the year. NTM leisure transient combined bookings/rate y/y growth accelerated by 180bp sequentially from last month. NTM business transient combined bookings/rate y/y growth accelerated by 100bp sequentially from last month. NTM group combined bookings/rate y/y growth decelerated by 180bp from last month. For this month’s data and all past data click here.
Lodging fundamentals have been strong and the stocks have been outperformers YTD despite broad macro concerns that the cycle feels toppy and despite weakness from other cyclical industries like cruise lines, for example. We think there are four key reasons why lodging stocks continue to work: 1) supply growth is likely peaking this year and the pipeline has stopped increasing; 2) demand trends have been modestly improving led by corporate travel; 3) inflation and rising oil prices are generally positive for RevPAR; and 4) lodging REIT M&A has sparked incremental interest.
HLT reported 1Q EPS ex-items of $0.55, above consensus of $0.51 and our $0.53 estimate. Recall HLT previously pre-reported a range of $0.52-$0.54 on April 9 prior to the HNA sale. Adjusted EBITDA of $445M was also at the high-end of the pre-reported range.
April TravelClick data was released this morning (04/24/18) and showed steady trends in NTM combined bookings/rates in the top 25 North American markets. The average NTM revenue y/y of the three segments was up 4.2% versus 4.3% last month. NTM business transient combined bookings/rate y/y growth decelerated by 20bp sequentially from last month. NTM leisure transient combined bookings/rate y/y growth decelerated by 250bp sequentially from last month. NTM group combined bookings/rate y/y growth accelerated by 260bp from last month. For this month’s data and all past data click here.
MAR and HLT are higher quality consumer discretionary companies because of their business models, which offer structural asset-light growth. Both stocks pulled back more than 10% from their highs along with the market, and it’s our view that these stocks should generally be bought on pullbacks, all else equal, because long-term EBITDA growth and capital returns are more certain than with many other companies. To compare we looked back 25 years to find prior 10%+ peak-to-trough selloffs in MAR – we can’t compare HLT because it hasn’t been public for long and its business model recently changed to pure asset-light, so we use MAR as the proxy. Outside of recessionary time periods these pullbacks have generally been short-lived, and MAR has gone on to make new highs.
This is a 26 page note we write each quarter where we update our thesis for each industry and each company into earnings and for the remainder of the year. We hope you will join us at our quarterly investor lunch we’re hosting in NYC on Friday.
This morning (4/9/2018) pre-market HLT announced a secondary offering for HNA to sell ~63.1M shares of its ~82.5M stake in the company. HLT intends to repurchase an additional 10M of HNA’s shares (~$775M), with an option to increase the repurchase amount to 16.5M shares (~$1.3B). After this offering HNA’s stake will be down to ~3% or potentially 0% if the underwriters exercise their option for an additional ~9.5M shares. We believe this sale is positive because it eliminates an overhang and HLT is repurchasing a large amount of stock.
- 1 of 7
- next →