MCLEAN, Va. - Hilton Worldwide Holdings Inc. (NYSE: NYSE:HLT), a global hospitality leader, has announced a significant expansion of its stock repurchase program. The company's Board of Directors has approved the authorization to buy back an additional $3.5 billion of its common stock, which increases the total amount available for future repurchases to approximately $4.8 billion.
The repurchase of shares by Hilton may occur in the open market, through privately negotiated transactions, or by other means as per the company's discretion and in compliance with the Securities and Exchange Commission (SEC) regulations. The timing and volume of the repurchases will be subject to market conditions, liquidity availability, cash flow, and other factors. The program does not require the company to repurchase any specific dollar amount or number of shares, and it may be suspended or discontinued at any time.
This move comes amidst a landscape where companies are navigating various market uncertainties, including those mentioned in the press release, such as macroeconomic factors, industry risks, and geopolitical events. Hilton has cited factors such as inflation, changes in interest rates, labor shortages, and supply chain disruptions as potential risks that could impact their operations and financial performance.
Hilton is recognized for its extensive portfolio, which includes over 8,300 properties and more than 1.25 million rooms across 138 countries and territories. The company has a history of over 100 years in the hospitality industry and has been acknowledged for its workplace environment and sustainability efforts.
The information regarding this expansion of Hilton's stock repurchase program is based on a press release statement from the company. Hilton's management and stakeholders will likely monitor the execution of this program, considering the various internal and external factors that could influence the company's financial strategies and market performance.
In other recent news, Hilton Worldwide has seen its share price target adjusted by several financial institutions. TD Cowen maintained its Buy rating but reduced the price target to $256, following a lower than expected Revenue per Available Room (RevPAR) increase of 1.4%. Despite these short-term challenges, the firm's analysts anticipate a robust pipeline for Hilton, with new starts this year surging by 21%.
Meanwhile, Mizuho (NYSE:MFG) Securities raised its price target for Hilton to $243, retaining an outperform rating, in light of a robust adjusted EBITDA of $904 million, surpassing market consensus and analyst's projections. The firm also noted Hilton's net unit growth exceeded expectations, with a 7.8% year-over-year increase.
Truist Securities adjusted its financial outlook for Hilton, raising the price target to $220 while maintaining a Hold rating. This adjustment was based on an analysis of Hilton's anticipated financial performance, updating its 2024 and 2025 adjusted EBITDA and EPS estimates. Deutsche Bank (ETR:DBKGn) echoed a similar sentiment, increasing Hilton's price target to $200 and maintaining a Hold rating, while noting a deceleration in Hilton's RevPAR but highlighting the company's strong unit growth outlook.
These are recent developments following Hilton's Third Quarter 2024 Earnings Conference Call, which revealed strong performance and an optimistic outlook for 2025. The company reported record hotel openings, significant milestones in its Hilton Honors program, and a system-wide RevPAR increase. Hilton executives also expressed confidence in achieving the 2025 EBITDA target of $3.69 billion.
InvestingPro Insights
Hilton's decision to expand its stock repurchase program aligns with its strong financial performance and market position. According to InvestingPro data, Hilton boasts a market capitalization of $61.59 billion, reflecting its significant presence in the hospitality industry. The company's impressive gross profit margin of 76.04% for the last twelve months as of Q3 2024 underscores its operational efficiency and ability to generate substantial profits from its revenue.
InvestingPro Tips highlight Hilton's financial strength, noting that the company has been profitable over the last twelve months and analysts predict continued profitability this year. This financial stability likely contributes to management's confidence in expanding the share buyback program.
The stock's strong performance is evident in its 51.73% price total return over the past year, and it's currently trading near its 52-week high, with a price that's 99.45% of its highest point. This upward trajectory supports the company's decision to invest in its own shares, potentially seeing them as undervalued despite the high P/E ratio of 53.99.
It's worth noting that InvestingPro offers 16 additional tips for Hilton, providing investors with a comprehensive analysis of the company's financial health and market position. These insights can be valuable for understanding the full context of Hilton's stock repurchase decision and its potential implications for investors.
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