Latest news with #assetlightmodel
Bloomberg
a day ago
- Business
- Bloomberg
Diageo Said to Tap BofA, Goldman for East African Unit Review
Save Diageo Plc has picked Bank of America Corp. and Goldman Sachs Group Inc. for a strategic review of East African Breweries Ltd., people familiar with the matter said, as the distiller looks to an asset light model to free up capital for reviving growth. Options for Nairobi-listed EABL may include a sale of just the beer business, which could be valued at about $2 billion in a deal, the people said. EABL has a market value of about $1.2 billion and Diageo is its largest shareholder with a 65% stake.
Forbes
17-07-2025
- Business
- Forbes
What's Next For Hyatt's Stock?
42nd Street with traffic and view of Hyatt hotel, Pershing Square Plaza and Grand Central station, ... More New York City. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images) Hyatt Hotels Corporation stock (NYSE: H) has experienced a robust performance lately, increasing by 10% over the last month, surpassing the broader S&P 500's 3% return and competitor Marriott International's (NASDAQ: MAR) 7% rise. However, after such a rally, the critical question is: what comes next? A significant catalyst occurred on June 30, when Hyatt revealed a $2B sale of Playa Hotels' real estate to Tortuga Resorts. While selling off assets may appear concerning, Hyatt kept long-term management contracts, converting the transaction into a high-margin, recurring revenue stream. This shift highlights Hyatt's transition to an asset-light model, aligning with broader industry trends that favor fee-based income over capital-intensive ownership. This change enhances capital efficiency and attracts investors. That said, those interested in growth with less volatility than individual stocks might consider the High Quality portfolio, which has outperformed the S&P 500 with returns exceeding 91% since its inception. Q1 Earnings: Mixed Headlines In Q1 2025, Hyatt achieved adjusted earnings per share of $0.46, surpassing expectations despite stagnant revenue. RevPAR (revenue per available room) increased by 5.7%, and net rooms went up by 10.5%, which boosted fee income. However, reported net income fell by 96% year-over-year, mainly due to challenging comparisons, as the previous year included gains from asset sales and heightened interest expenses. Despite the misleading signals, the market concentrated on the essential metrics. Hyatt repurchased $149 million in stock and reaffirmed its commitment to the asset-light model. Guidance: Slight Trim, But Growth Still Intact Management slightly decreased full-year RevPAR guidance to 1–3%, reflecting a more cautious outlook on global travel trends. Nevertheless, Hyatt held its full-year adjusted EBITDA forecast at $1.08 to $1.135 billion, representing a growth of 6–12%. Moving forward, investors will pay attention to key indicators: stability in RevPAR, macroeconomic signals regarding consumer travel demand, and the robustness of Hyatt's fee pipeline. The Bigger Picture In terms of valuation, Hyatt trades at a P/E of 19.2 and P/S of 2.2, both lower than Marriott's 31.3 P/E and 3.1 P/S, suggesting more reasonable pricing. Over the last three years, Hyatt has delivered an annualized revenue growth of 22.8%, surpassing Marriott's 18.3% and the S&P 500's 5.5%. However, profitability continues to be a concern. Hyatt's operating margin stands at 7.2%, which is less than half of Marriott's 15.4%, and its operating cash flow margin is 8.2% compared to Marriott's 10.3%. Regarding resilience, Hyatt dropped 33.2% during the 2022 inflation crisis and 60.6% during the Covid market crash, indicating a higher sensitivity to downturns compared to the S&P 500. Still, with strong room growth, a transition to an asset-light model, and solid liquidity of $1.8B in cash and a 12.9% cash-to-assets ratio, Hyatt could see more upside, especially if travel momentum continues into 2025. Additionally, see our analysis on Hyatt Valuation. Bottom Line Hyatt's rise reflects increasing confidence in its asset-light transition and growing fee income. While margins lag those of Marriott, Hyatt's valuation, growth profile, and capital flexibility make it a stock worth monitoring. Investing in a single stock can carry risks. For those seeking growth with reduced volatility, diversified portfolios like the Trefis High Quality portfolio provide a compelling alternative. Why is that? As a group, HQ Portfolio stocks have delivered superior returns with lower risk compared to the benchmark index; they present less of a roller-coaster experience, as shown in HQ Portfolio performance metrics.
