Bear Of The Day: Hyatt Hotels (H)

Disruptive companies are the most intriguing to me. They come in and shake up entire industries while changing the way we do business. Think about how hailing a taxi has changed with the widespread use of Uber. Now I can’t even remember the last time I called a cab company and dealt with a dispatcher.

What Uber did for cars, AirBnB did for the hotel business but in a different way. Air BnB has allowed customers to skip hotels altogether and rent out houses and apartments for short term use. The result has added stress to the hotel industry by creating a giant competitor out of thin air.

Today’s Bear of the Day is one of these hotel stocks, Hyatt Hotels (H). Hyatt is a global company that manages, owns, franchises and develops Hyatt branded hotels, resorts, residential and vacation ownership properties around the world. The company is based right here in Chicago, Illinois and has hotel locations in North America, Asia, Europe, Latin America, the Caribbean, Australia, New Zealand, Africa, and the Middle East.

The hotel and motel industry ranks in the Bottom 18% of our Zacks Industry Rank. That’s because several names in the business, including Hyatt, are a Zacks Rank #5 (Strong Sell). The reason for the harsh rank is the negative earnings revisions the company has seen over the last sixty days. For the current quarter, current year and next year, four analysts have dropped their earnings estimates. The result is a dip in the Zacks Consensus Estimate for these periods. The most extreme move can be seen in our Zacks Consensus Estimate for next year. The number has gone from $1.72 to $1.50.

The earnings history has been a bit sketchy here as well. It seems like every other quarter the company misses earnings. While last quarter the company did turn in a 4 cent beat, the quarter before they missed by 3 cents, coming in at 21 cents EPS versus consensus calling for 24 cents. Two quarters before that, the company had a huge miss, coming in at 28 cents versus a Zacks Consensus Estimate looking for 45 cents.

Investors looking for other names in the same industry can look at Zacks Rank #1 (Strong Buy) Intrawest Resort (SNOW) or Zacks Rank #2 (Buy) Belmond (BEL).

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