Playa Hotels & Resorts (PLYA) Exceeds Third Quarter Earnings and Revenue Estimates

Playa Hotels & Resorts (PLYA) posted quarterly earnings of $0.04 per share, beating Zacks consensus estimate of $0.02 per share. That compares to a loss of $0.09 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a 100% earnings surprise. A quarter ago, this all-inclusive resort developer and operator was expected to post earnings of $0.08 per share when it actually produced earnings of $0.15, offering a surprise of 87.50%.

In the past four quarters, the company has exceeded consensus EPS estimates three times.

Playa Hotels, which is part of the Zacks Hotels and Motels industry, reported revenue of $204.62 million for the quarter ended September 2022, beating the Zacks consensus estimate by 7.22%. That compares to revenues of $151.29 million a year ago. The company has exceeded consensus revenue estimates four times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of Playa Hotels are down about 24.9% year-to-date compared to a -21.1% drop for the S&P 500.

What’s next for hotels in Playa?

While Playa Hotels has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Before that Press release, the trend of estimate revisions for Playa Hotels: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 3 (hold) ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.09 on $199.55 million in revenue for the upcoming quarter and $0.50 on $827.27 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, hotels and motels are currently in the top 12% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in Zacks’ broader consumer discretionary sector, Endeavor Group (EDR), has yet to report results for the quarter ending September 2022. Results are expected to be released on November 10.

This entertainment, sports and content company is expected to post quarterly earnings of $0.31 per share in its next report, representing a year-over-year change of +93.8%. The consensus EPS estimate for the quarter has been revised down 5.3% in the past 30 days from the current level.

Endeavor Group’s revenue is expected to be $1.25 billion, down 9.9% from the year-ago quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.