Highlighted Charts
U.S.: Pan American Silver ( PAAS ), Crown Holdings ( CCK ), Autoliv ( ALV ), Hilton Worldwide ( HLT ), Harley Davidson ( HOG ), Kraft Heinz Company ( KHC ), Sunpower ( SPWR ), SEI Investments ( SEIC ), Perrigo ( PRGO ), Tivity Health ( TVTY ), Sothebys ( BID ), Delux Corp ( DLX ) Netscout Systems ( NTCT ), Jetblue Airways ( JBLU ).
Developed: Kobe Steel ( BS@N.JP ), Kawasaki Heavy Industry ( KW@N.JP; 7012 JP ), Daimler ( DAIX.DE, DAI GR ), Thai Beverage Public ( THBE.SG; THBEV SP ), Nomura Real Estate ( NREH.JP; 3231JP ), UDG Healthcare ( UDG.GB; UDG LN ), Isetan Mitsukoshi Holdings ( ZW@N.JP; 3099 JP ), AMS ( AMS.CH; AMS SW ), Nexon ( NXCL.JP ; 3659 JP ), East Japan Railway ( EAJR.JP; 9020 JP )
Emerging: Com2us ( CUS.KR; 078340 KS ), Tata Global Beverages ( TEA.IN; TGBL IN ), KB Financial Group ( KHB.KR; 105560:KS ), Sino-America Silicon Products ( SAS.TW; 5483 TT ), Korean Airlines ( KAA.KR; 003490 KS ).
Stocks worth focusing on in this week’s Global Laggards:
Hilton Worldwide ( HLT ) – Cyclical ( $23B market cap ) – a hospitality company operating more than 5,300 properties (~879,000 rooms) through 14 brands across 106 countries. Its brands include Hilton Hotels & Resorts, Waldorf Astoria, Embassy Suites, and Hampton.
The stock has been trading along its 10-WMA since February and broke below its 40-WMA after reporting earnings last week. The stock is testing the lower end of the current consolidation at ~$75-76; should this break, the next level of support is ~$67.
HLT’s RS line has been declining from late April with a current RS Rating of 50 (poor). Its three-year earnings growth rate is -3%, along with an EPS Stability Factor of 26, which is the second weakest among its industry group peers. Its after-tax margin of 9.2% in the latest quarter was among the lowest of all U.S. lodging stocks. The stock’s A/D Rating has remained negative for seven out of the past nine weeks, indicating ongoing distribution.
After exceeding EPS expectations over the last several quarters, HLT’s Q2 EPS was in line with consensus expectations.
The RevPAR guidance for 2018 remains unimpressive at 3-4% y/y. Management expects system-wide RevPAR growth for Q3 at 2.5-3% y/y, which is below the full-year guidance range.
HLT generates roughly 70% of its EBITDA from U.S. hotels and we continue to believe that the U.S. lodging industry is near its peak.
In 2019, supply growth in the U.S. lodging industry will surpass demand growth for the second time in 10 years. HLT’s development pipeline continues to grow; it had a pipeline of 362,000 rooms (2,370 hotels) at the end of Q2. Slightly less than half of this pipeline consists of developments for the U.S., and this leaves HLT vulnerable to RevPAR underperformance in the coming years.
