Why Starwood Hotels & Resorts Worldwide (HOT) Stock Is Down In Pre-Market Trading Today

NEW YORK (TheStreet) --Shares of Starwood Hotels & Resorts Worldwide Inc. (HOT) are down -1.40% to $78 in pre-market trading on Friday after the company issued weak 2014 third quarter guidance.

The hotel and leisure company said it is expecting earnings per share to be between 62 cents and 65 cents, compared to the expectations of analysts polled by Thomson Reuters of 67 cents per share.

Additionally, Starwood Hotels was downgraded to "market perform" from "outperform" at Wells Fargo (WFC), as the firm feels the company lacks near-term catalysts.

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Wells Fargo kept its $81 to $83 price target on the stock.

Separately, TheStreet Ratings team rates STARWOOD HOTELS&RESORTS WRLD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate STARWOOD HOTELS&RESORTS WRLD (HOT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, STARWOOD HOTELS&RESORTS WRLD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: HOT Ratings Report
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