Long on Hyatt ($H)

Investment idea by DTI

Exchange: NYSE


Entry strategy

Price: 81.5-83.5
Stop-loss: under 75
Take profit: 91.5, then 102
Investment horizon: up to 3 months

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Company details

Hyatt Hotels Corporation is an international hotel chain founded in 1957. In 1962 the company went public, but was taken back private in 1979. Hyatt manages more than 700 properties in 54 countries. Its market cap is $9,56 billion.

Financial summary of Hyatt performance is presented in Table 1:

Hyatt financial overview
Table 1. Hyatt Hotels ($H) financial overview. Source: MarketWatch

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Technical analysis (trading plan)

Hyatt trading plan
Pic. 1. Trading strategy for Hyatt Hotels stock ($H). Source: TradingView

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Fundamental analysis

Hyatt stock is trading well below stocks of its competitors. P/E coefficient for Hyatt equals 30.84 against the industry average of 62.68 (see table 2).

Hyatt valuation ratios
Table 2. Hyatt ($H) valuation ratios. Source: Reuters

Hyatt profitability margins, while generally healthy, are lower that those of others in the industry (see table 3). That might be the results of the company's size — Hyatt was included in top 5 biggest hotel chains by revenue in 2017.

Hyatt profitability ratios
Table 3. Profitability ratios of Hyatt Hotels ($H). Source: Reuters

Meanwhile, Hyatt beats Marriott and Hilton, bigger rivals, in terms of profitability margins, and surpasses the rest of the industry when it comes to financial stability (see table 4).

Hyatt financial stability ratios
Table 4. Financial stability ratios for Hyatt Hotels ($H). Source: Reuters

Hyatt name an expansion in China as its main growth driver. In 3 to 5 years the company plans to double the number of rooms in the region to 40 thousand. In addition to development in tourism within China's borders, hotel business will be fostered by the growing number of Chinese tourists going abroad.

The company also broadens its product line, offering clients personalized touristic experiences and exotic accommodations. Besides, Hyatt is working on getting into more tourist alliances.