By Connor Campbell, Financial Analyst, Spreadex
Stock of the day: InterContinental Hotels Group PLC(LON:IHG) (LON:IHG)
2017 has been a fairly 5 star year for the hotelier. A steady rise from January revved up in April, eventually leading to an all-time high of £44.90 by the start of June. Since then things have admittedly tailed off, with the stock slipping to a current trading price of £42.62
The company’s financials have largely bore out the record-high hitting rise. The end of February saw InterContinental’s full year report, and though revenue fell a slightly greater than expected 4.9% (to $1.72 billion), a 9.5% surge in adjusted operating profit and a 1.8% rise in revenue per available room – i.e. the industry’s most used, and arguably most important, metric – overshadowed that dip. Of course it helped that InterContinental also announced a $400 billion special dividend, its first unaided by a major disposal, while hiking its annual dividend by 11%.
May’s first quarter update was similarly positive, with revpar rising 2.7% and occupancy up 0.8%. Breaking those figures down, its biggest growth came in Europe, where revpar surged 6.9% (and a whopping 12% in London). The US was less robust with a 1.9% rise, while in Asia, the Middle East and Africa revpar rose just 0.1%. There was also the announcement that CEO Richard Solomons would be stepping down in August, though luckily InterContinental had a replacement lined up in CCO Keith Barr.
In terms of next Tuesday’s half year statement, investors will want to see continued signs that InterContinental is weathering the wider volatility in the tourism sector. Along those lines revenue is expected to rise 4.4% to $875 million, with a 21% increase in earnings to $1.13 per share.
InterContinental Hotels Group PLC has a consensus rating of ‘Hold’ with an average target price of £37.04.
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