#3 - Hilton Hotels (NYSE:HLT)
Year-to-Date Loss: 44%
The story for Hilton Hotels (NYSE:HLT) is virtually identical to Marriott. Which makes the prediction for the stock about the same. Hilton, like Marriott, takes an asset-light approach. That means Hilton does not actually own most of the hotels that bear its name.
One of the ways Hilton has added value for its shareholders is through an aggressive stock buyback program. In 2019 alone, the company bought back 16.9 million shares ($1.5 billion). In the three years the company has been buying back shares, it has repurchased approximately $4.3 billion worth of stock.
Earlier this year, HLT’s board authorized a non-binding buyback of an additional $2 billion in shares. However, the company noted that it is not obligated to repurchase a specific dollar amount and may suspend or discontinue the program at any time.
In October 2019, Hilton president and CEO Christopher Nassetta said of the buybacks, “I think our strategy on how we want to return free cash flow that we don’t need to grow the business to shareholders in the form of a modest dividend but a lot of buybacks over time is the right strategy. We’re going to stick with it.”
That was then. As Congress debates a stimulus package for the industry, companies that have instituted stock buyback companies are in the crosshairs. Ultimately, it won’t change much, but it will make the idea of a buyback unpalatable. At least for this year.
But like Marriott, it’s hard to see a reason to buy HLT stock without a clear idea of what the new normal will be and when that new normal will start.
About Hilton Worldwide
Hilton Worldwide Holdings Inc, a hospitality company, engages in managing, franchising, owning, and leasing hotels and resorts. It operates through two segments, Management and Franchise, and Ownership. The company engages in the hotel management and licensing of its brands. It operates luxury hotels under the Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, and Conrad Hotels & Resorts brand; lifestyle hotels under the Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton, and Motto by Hilton brand; full service hotels under the Signia by Hilton, Hilton Hotels & Resorts, and DoubleTree by Hilton brand; service hotels under the Hilton Garden Inn, Hampton by Hilton, and Tru by Hilton brand; all-suite hotels under the Embassy Suites by Hilton, Homewood Suites by Hilton, and Home2 Suites by Hilton brand; and economy hotel under the Spark by Hilton brand, as well as Hilton Grand Vacations.
Read More - Current Price
- $197.53
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $207.59 (5.1% Upside)
