Playa Hotels & Resorts (PLYA) Reports Fourth Quarter Loss, Beats Revenue Estimates

Playa Hotels & Resorts (PLYA) reported a quarterly loss of $0.03 per share against Zacks consensus estimate of a loss of $0.01. That compares to a loss of $0.44 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -200%. A quarter ago, this all-inclusive resort developer and operator was expected to post a loss of $0.08 per share when it actually produced a loss of $0.09, delivering a surprise of -12.50%.

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

Playa Hotels, which is part of the Zacks Hotels and Motels industry, posted revenue of $176.8 million for the quarter ended December 2021, beating the Zacks consensus estimate by 6.43%. That compares to revenues of $66.24 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 have gained about 2.1% year-to-date compared to the -11.3% decline in the S&P 500.

What’s next for hotels in Playa?

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

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only 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: unfavourable. 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. 4 (sell) ranking for the stock. Thus, stocks are expected to underperform 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 $0.05 on $181.96 million in revenue for the upcoming quarter and $0.08 on $660.18 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 currently sit in the bottom 40% of more than 250 Zacks 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 the same sector, Hilton Grand Vacations (HGV), has not yet released its results for the quarter ended December 2021. The results are expected to be released on March 1.

This company is expected to post quarterly earnings of $0.78 per share in its next report, which is no change from the year-ago quarter. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Hilton Grand Vacations revenue is expected to be $762.9 million, up 259.9% from the prior year quarter.

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