One Factor Helping Hilton Worldwide (HLT) Stock Climb

NEW YORK (TheStreet) -- Shares of Hilton Worldwide Holdings Inc. (HLT) are climbing, up 0.33% to $28.76 in afternoon trading Thursday, after the company had coverage initiated by analysts at Brean Capital earlier today.

Analysts at Brean Capital started shares of Hilton Worldwide with a "buy" rating and $34 price target.

The firm sees more than a 15% upside to shares as management works to better its balance sheet.

Brean analysts added that they expect Hilton to be a leader in global unit growth.

McLean, Va.-based Hilton Worldwide is a hospitality company operating 4,080 hotels, resorts and timeshare properties, consisting of 671,926 rooms in 90 countries and territories.

Separately, TheStreet Ratings team rates HILTON WORLDWIDE HOLDINGS as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HILTON WORLDWIDE HOLDINGS (HLT) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

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

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 10.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HILTON WORLDWIDE HOLDINGS has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HILTON WORLDWIDE HOLDINGS increased its bottom line by earning $0.68 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus $0.68).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.54% over the past year, a rise that has exceeded that of the S&P 500 Index. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The gross profit margin for HILTON WORLDWIDE HOLDINGS is rather low; currently it is at 24.89%. Regardless of HLT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.77% trails the industry average.
  • The debt-to-equity ratio is very high at 2.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, HLT maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: HLT Ratings Report

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