CHICAGO, Oct. 18, 2013 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Marcus (NYSE: MCS-Free Report), Host (NYSE: HST-Free Report), Hyatt (NYSE: H-Free Report), Marriott (NYSE: MAR-Free Report) and Orient Express (NYSE: OEH-Free Report).
Where Should Your Portfolio Stay?
The summer travel season is long past, but that should not cause investors to ignore the lodging industry. Vacationing remains popular and business activity is supportive to travel despite the use of technology - teleconferencing and Skype can only go so far. Smith Travel is looking for 2014 Revenue per Available Room (RevPAR) to rise 6.0%. The outlook for activity seems favorable in light of a slow growth global economy.
Outside of the U.S., it looks like activity in Asia has slowed given the softer tone of EM growth. Smith Travel noted that RevPAR had declined 3.2% year to date through August. In contrast, European demand has picked up, but travelers are viewed as cost conscious. Demand in Europe was reported up 2.6% over the past twelve months with an average daily room rate increase of 1.7%. Demand in Europe has surpassed that in the U.S. for the first time since October 2010. If the global economy is on an upswing, it should support the lodging industry, especially in Europe and Asia.
Let's take a look at some well-known lodging companies to see which stocks may provide some rest for your portfolio.
Earnings revisions and growth outlook:
Marcus (NYSE: MCS-Free Report) and Host (NYSE: HST-Free Report) have seen their numbers bumped marginally higher for 2013. Looking to 2014, Hyatt (NYSE: H-Free Report) has seen its EPS estimate cut slightly and Intercontinental has seen its EPS forecast lift marginally. Analysts do not see conditions changing dramatically going into earnings season. Future estimate changes are most likely to come after companies report profits.
2014 earnings growth is expected to be vibrant in the sector with Marriott (NYSE: MAR-Free Report) and H expected to display growth in excess of 17% y/y. Orient Express (NYSE: OEH-Free Report) is a stand out in the table with growth forecast to jump over 80% y/y. There is a turnaround occurring here. For the group, earnings per share are expected to rise 20.5% y/y on average (simple group average). The median growth rate of 10.8% y/y, and may be a better measure of the group's potential given the skew created by OEH.
Sales growth is forecast to be less strong than earnings growth, but still expected to rise in the mid signal digits. The average for the group is 5.7% with MAR and OEH displaying the greatest strength. The numbers are consistent with the macro forecast for RevPAR.
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