Hilton Grand Vacations (HGV) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released o ...

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Core Viewpoint - Hilton Grand Vacations (HGV) has underperformed in the stock market, losing 22% of its value over the past year, and recent financial results indicate ongoing challenges that warrant a cautious outlook [1][5]. Financial Performance - In Q2, HGV reported earnings of $0.62, missing expectations by $0.43, while revenue increased by 23% year-over-year to $1.2 billion, largely due to the Bluegreen acquisition [2][3]. - Adjusted EBITDA was $262 million, up 5.6% from last year, but the company faced a significant increase in interest expenses, rising to $87 million from $44 million, which outpaced EBITDA growth [2][3]. - The company experienced a decline in adjusted EBITDA margins, contracting by 310 basis points to 21.5% due to rising sales and marketing costs, which increased by $117 million to $453 million [3]. Consumer Behavior and Market Conditions - Management noted a pullback in consumer spending towards the end of the quarter, with timeshare purchases being highly discretionary, influenced by squeezed real incomes and elevated borrowing costs [2][3]. - Consumer delinquency rates are rising, leading to a provision for financing losses of $95 million, up from $41 million a year ago, indicating increased credit risk [3][4]. Financial Policy and Debt Management - HGV executed $100 million in share repurchases in Q2 and an additional $46 million in July, with $114 million remaining under its authorization, despite elevated debt levels [4]. - The company has a corporate debt of $4.9 billion at a 6.85% average interest rate, with a debt/EBITDA ratio of 4.5x, which is considered high [4]. Valuation and Investment Outlook - The current valuation of HGV at nearly 12x earnings appears aggressive given the pressures on the business, especially in comparison to similar companies in the consumer finance sector [5]. - The company is moving to a "hold" rating as the stock has underperformed the market by about 20%, and further evidence of business stabilization is needed before considering a buy [5].

Financial Data and Key Metrics Changes - Reported contract sales for Q2 2024 were $757 million, with EBITDA at $270 million and margins of 22%, which were below expectations [4][5] - Adjusted EBITDA was $270 million, with margins of 24% when excluding cost reimbursements [14] - Adjusted free cash flow for the quarter was $370 million, indicating strong cash generation despite challenges [10][21] - The company lowered its guidance for adjusted EBITDA to a range of $1.075 billion to $1.135 billion, reflecting pressures on VPG and tour trends [22] Business Line Data and Key Metrics Changes - Contract sales included $189 million from Bluegreen, with new buyers comprising 31% of contract sales, improving over 300 basis points from Q1 [15] - Tours for the quarter were over 226,000, slightly below the prior year's pro forma level, with owner tours showing low single-digit growth [15][16] - VPG for the quarter was $3,320, which is just over 10% ahead of 2019 levels, but both new buyer and owner VPGs saw slight declines [16] Market Data and Key Metrics Changes - Occupancy in the quarter was in line with last year at 83%, with strong marketing and rental arrivals anticipated for the back half of the year [9] - The financing segment reported revenue of $102 million with a profit margin of 57%, impacted by amortization of non-cash premiums from acquired portfolios [17] Company Strategy and Development Direction - The company is focusing on restructuring its sales and marketing organization to improve execution and adapt to its larger scale following the Bluegreen acquisition [5][6][12] - Integration efforts include rebranding properties and enhancing technology platforms to streamline operations and improve customer experience [10][11] - The company remains committed to capital returns, repurchasing shares, and maintaining a strong liquidity position [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted a broad-based pullback in consumer spending behavior, particularly affecting new buyer segments, leading to a revision of guidance [5][7] - Despite challenges, management expressed confidence in the long-term business model, highlighting a stronger product offering and increased cash flow generation [13] - The company anticipates continued pressure on new buyer close rates but expects stabilization in owner performance [26][49] Other Important Information - The company ended the quarter with over 720,000 owners and a net owner growth (NOG) of 1.7% [9][20] - The debt balance at quarter end was $4.9 billion in corporate debt and approximately $1.7 billion in non-recourse debt [23] Q&A Session Summary Question: Guidance adjustment and execution issues - Management discussed the comfort level with guidance adjustments, indicating that the majority of the pullback was driven by VPG performance and new buyer close rates [25][29] Question: Update on Maui - Management provided an update on recovery efforts in Maui, noting that while resorts are operational, new buyer tour generation remains affected by previous disruptions [30] Question: Impact of strengthening Japanese yen - Management acknowledged the positive impact of a strengthening yen on demand for products in Hawaii, although a lag effect is expected [32][34] Question: Sales reorganization details - The sales reorganization was described as a necessary adjustment to align with the company's growth and improve efficiency across a broader sales footprint [36][38] Question: Loan loss provision increase - Management explained the rationale behind increasing the loan loss provision, emphasizing the integration of Bluegreen's credit processes and historical loss data analysis [40][42] Question: Buyer behavior and financing strategy - Management indicated that various promotions are routinely tested to stimulate demand, but no definitive changes in deposit requirements are planned [61][63] Question: Local market demand and reorganization impact - Management confirmed that local market softness is being addressed through the reorganization, which aims to enhance direct marketing efforts [68]

For the quarter ended June 2024, Hilton Grand Vacations (HGV) reported revenue of $1.24 billion, up 22.6% over the same period last year. EPS came in at $0.62, compared to $0.85 in the year-ago quarter. The reported revenue represents a surprise of -9.95% over the Zacks Consensus Estimate of $1.37 billion. With the consensus EPS estimate being $0.89, the EPS surprise was -30.34%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to dete ...

Hilton Grand Vacations (HGV) came out with quarterly earnings of $0.62 per share, missing the Zacks Consensus Estimate of $0.89 per share. This compares to earnings of $0.85 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -30.34%. A quarter ago, it was expected that this company would post earnings of $0.87 per share when it actually produced earnings of $0.95, delivering a surprise of 9.20%. Over the last four quarters, the ...

Core Insights - Hilton Grand Vacations (HGV) is expected to report quarterly earnings of $0.89 per share, reflecting a year-over-year increase of 4.7% [1] - Anticipated revenues for the quarter are projected to be $1.37 billion, representing a significant increase of 36.2% compared to the same quarter last year [1] Earnings Projections - The consensus EPS estimate has been revised upward by 6.6% in the past 30 days, indicating a reassessment by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions and short-term stock price movements [3] Revenue Estimates - Analysts estimate 'Revenues- Sales of VOIs, net' to be $550.58 million, showing a year-over-year change of +55.1% [5] - 'Revenues- Cost reimbursements' are expected to reach $121.75 million, indicating a year-over-year increase of +25.5% [5] - 'Revenues- Rental and ancillary services' are projected at $189.13 million, reflecting a change of +9.3% from the prior year [5] - The estimate for 'Revenues- Sales, marketing, brand and other fees' stands at $179.78 million, with a change of +3.9% year-over-year [6] - 'Revenues- Financing' is projected to be $115.23 million, suggesting a year-over-year increase of +51.6% [6] - 'Revenues- Resort and club management' is estimated at $168.30 million, indicating a change of +26.5% year-over-year [6] Stock Performance - Hilton Grand Vacations shares have decreased by -3.1% in the past month, compared to a -6.7% decline in the Zacks S&P 500 composite [7] - With a Zacks Rank 1 (Strong Buy), HGV is expected to outperform the overall market in the near term [7]

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks. Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high ...

Core Insights - Hilton Grand Vacations (HGV) is currently rated as a 1 (Strong Buy) by Zacks, while Choice Hotels (CHH) holds a 3 (Hold) rating, indicating a more favorable outlook for HGV among value investors [2][3]. Valuation Metrics - HGV has a Price-to-Book (P/B) ratio of 2.04, significantly lower than CHH's P/B ratio of 927.03, suggesting HGV may be undervalued relative to its book value [5]. - The forward Price-to-Earnings (P/E) ratio for HGV is 10.67, compared to CHH's forward P/E of 19.49, indicating HGV is trading at a lower valuation multiple [9]. - HGV's PEG ratio stands at 1.81, while CHH's PEG ratio is 2.16, suggesting HGV has a more favorable earnings growth outlook relative to its price [9]. Investment Considerations - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, which is a strong indicator of HGV's improving earnings outlook [2][6]. - HGV has a Value grade of B, while CHH has a Value grade of C, reflecting HGV's stronger position based on various fundamental metrics [8].

See the full list of top ranked stocks here Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, July 15: Theravance Biopharma's shares gained 11.2% over the last one month compared with the S&P 500's advanced of 2.7%. The company possesses a Momentum Score of A. Sprout Social, Inc. (SPT) : This social media management company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 9.3% over the last 60 days. ...