NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- H's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 9.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- H's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, H has a quick ratio of 2.47, which demonstrates the ability of the company to cover short-term liquidity needs.
- HYATT HOTELS CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HYATT HOTELS CORP increased its bottom line by earning $0.67 versus $0.35 in the prior year. For the next year, the market is expecting a contraction of 5.2% in earnings ($0.64 versus $0.67).
- The gross profit margin for HYATT HOTELS CORP is rather low; currently it is at 19.40%. Regardless of H's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, H's net profit margin of 1.00% is significantly lower than the same period one year prior.
- H has underperformed the S&P 500 Index, declining 18.08% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
Hyatt Hotels Corporation and its subsidiaries engage in the management, franchising, ownership, and development of Hyatt-branded hotels, resorts, and residential and vacation ownership properties worldwide. The company has a P/E ratio of 56.7, equal to the average leisure industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Hyatt Hotels has a market cap of $1.72 billion and is part of the
industry. Shares are down 3.3% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff