InterContinental Hotels Group, Inc. (IHG) recently rebounded from a key trend line after hitting a new multi-year high above $18 in mid June. This Zacks #1 stock has seen its estimate move higher since posting a solid 60% earnings surprise in early May.
Compamny Description
InterContinental Hotels Group PLC owns, manages and leases hotels and resorts worldwide under various brands such as InterContinental Hotels, Crowne Plaza Hotels and Holiday Inn Hotels & Resorts. The company was founded in 1967 and has a market cap of $4.84 billion.
The resurgent economy of the last year has helped consumers gain the confidence to start spending again, something that has been a boon to discretionary industries like hotel and vacation services. This dynamic helped InterContinental Hotel Groups deliver solid first-quarter results in early May that included a 60% earnings surprise.
First-Quarter Results
Revenue for the period was up 3% from last year to $362 million. Earnings were also solid, coming in at 16 cents , 60% ahead of the Zacks Consensus Estimate.
The company saw strong gains out of its Asia/Pacific region, where RevPAR (revenue per available room) was up 10% from last year, with Greater China up 22.2%.
The company also continues to re balance its hotel and room portfolio, with 8,160 rooms added to the system and 4,721 removed, in line with its growth strategy.
Paying Down Debt
InterContinetal also continues to focus on its balance sheet, paying off $200 million in debt during the quarter to reduce its total debt load to $1 billion.
Estimates Rising
The analysts were encouraged by the results, with estimates the current year up 14 cents on the good quarter to 88 cents. The next-year estimate is up 16 cents in the same time to $1.00, solid 13% growth projection.
In spite of the recent gains, shares of IHG still trade in lines with their peers with a forward P/E of 19X.
2-Year Chart
IHG has advancing along a very smooth trend line for most of the last 16 months, recently hitting a new multi-year high before pulling back a bit on general market volatility. Look for more support from the trend line on any more weakness.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service. Zacks Investment Research
