Park Hotels & Resorts (PK) AI Stock Analysis

966 Followers

Top Page

Park Hotels & Resorts

(NYSE:PK)

68Neutral

Park Hotels & Resorts is on a recovery path with strong financial performance, particularly in revenue growth and cash flow management. Although the stock shows weak technical indicators, it offers a good valuation with an attractive dividend yield. The earnings call provided a cautiously optimistic outlook with a focus on long-term growth despite some operational challenges. These factors combined result in a moderately positive outlook for the stock.

Positive Factors

Long-term Opportunities

Additional long-term opportunity at the Royal Palm project suggests potential growth for investors.

Renovated Assets Performance

The solid performance at renovated assets supports a positive outlook for the company's stock.

Negative Factors

Expense Growth

PK's setup faces headwinds with elevated expense growth, impacting future profitability.

Guidance Withdrawal

PK withdrew 2024 guidance due to uncertainty, creating unpredictability for investors.

Labor Costs Impact

Labor costs and renovation disruption present some pressure, potentially affecting stock performance.

Park Hotels & Resorts (PK) vs. S&P 500 (SPY)

Market Cap

$1.89B

Dividend Yield10.68%

Average Volume (3M)4.52M

Price to Earnings (P/E)9.3

Beta (1Y)1.30

Revenue Growth-3.67%

EPS Growth122.68%

CountryUS

Employees91

SectorReal Estate

Sector Strength79

IndustryREIT - Hotel & Motel

Share Statistics

EPS (TTM)1.02

Shares Outstanding201,864,180

10 Day Avg. Volume4,398,808

30 Day Avg. Volume4,522,649

Financial Highlights & Ratios

PEG Ratio0.08

Price to Book (P/B)N/A

Price to Sales (P/S)0.87

Price to Cash Flow (P/CF)7.10

P/FCF Ratio10.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.10

Price Target Upside61.32% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Park Hotels & Resorts Business Overview & Revenue Model

Company DescriptionPark is the second largest publicly traded lodging REIT with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park's portfolio currently consists of 60 premium-branded hotels and resorts with over 33,000 rooms primarily located in prime city center and resort locations.

How the Company Makes MoneyPark Hotels & Resorts generates revenue primarily through the ownership and operation of its hotel properties. The company earns money by leasing hotel rooms to guests, which forms the bulk of its income. Additionally, the company generates revenue from food and beverage sales, conference and event hosting, parking, and other guest services provided at its properties. Park Hotels & Resorts also benefits from its strategic partnerships with leading hotel brands that manage its properties, such as Hilton and Marriott, which help maintain high occupancy rates and premium pricing. Furthermore, the company focuses on enhancing property value through renovations and operational improvements, which can lead to increased revenue over time.

Park Hotels & Resorts Financial Statement Overview

Summary

Park Hotels & Resorts has shown significant recovery and growth post-pandemic, with notable improvements in revenue and profitability metrics. The balance sheet reflects reduced leverage and better financial stability, although further equity strengthening could enhance the company's financial standing. Cash flow management shows resilience and the ability to support growth and debt reduction. Overall, the company is on a positive trajectory but should continue efforts to enhance profitability and equity base.

Income Statement

Positive

The company has shown strong recovery and revenue growth from pandemic lows, with a significant rebound in revenue from $852 million in 2020 to $2.6 billion in 2024. Gross profit margin has improved, reaching 100% in 2024, indicating effective cost management. However, net profit margin at 8.15% in 2024, while positive, shows room for improvement. EBIT margin at 15.04% and EBITDA margin at 12.15% demonstrate profitability but highlight the need for further enhancement in operating efficiency.

Balance Sheet

Positive

The balance sheet reveals a reduction in total debt from $5.36 billion in 2020 to $225 million in 2024, enhancing financial stability. The debt-to-equity ratio significantly improved, indicating lower leverage. Return on Equity (ROE) has improved, showing better returns for shareholders. However, equity has decreased, affecting the equity ratio which stood at 39.79% in 2024, indicating moderate leverage with potential for strengthening equity position.

Cash Flow

Positive

The company has demonstrated strong cash flow management with positive free cash flow of $429 million in 2024, a substantial improvement from negative figures in 2020. Operating cash flow to net income ratio is favorable, indicating efficient cash generation relative to net earnings. The free cash flow to net income ratio highlights robust cash conversion, supporting reinvestment and debt reduction efforts.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.60B	2.70B	2.50B	1.36B	852.00M
	Gross Profit
745.00M	746.00M	693.00M	227.00M	-161.00M
	EBIT
391.00M	343.00M	413.00M	-178.00M	-1.20B
	EBITDA
696.00M	683.00M	573.00M	89.00M	-939.00M
	Net Income Common Stockholders
212.00M	97.00M	162.00M	-452.00M	-1.44B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
402.00M	717.00M	906.00M	688.00M	951.00M
	Total Assets
9.16B	9.42B	9.73B	9.74B	10.59B
	Total Debt
225.00M	4.71B	4.85B	4.90B	5.37B
	Net Debt
-177.00M	4.00B	3.94B	4.21B	4.41B
	Total Liabilities
5.57B	5.65B	5.44B	5.34B	5.74B
	Stockholders Equity
3.65B	3.81B	4.34B	4.45B	4.89B
Cash Flow		Free Cash Flow
429.00M	218.00M	241.00M	-191.00M	-524.00M
	Operating Cash Flow
429.00M	503.00M	409.00M	-137.00M	-438.00M
	Investing Cash Flow
-166.00M	-217.00M	87.00M	394.00M	119.00M
	Financing Cash Flow
-573.00M	-475.00M	-320.00M	-475.00M	914.00M

Park Hotels & Resorts Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.36

Price Trends

50DMA

11.90

Negative

100DMA

12.91

Negative

200DMA

13.12

Negative

Market Momentum

MACD

-0.39

Positive

RSI

36.60

Neutral

STOCH

6.18

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PK, the sentiment is Negative. The current price of 9.36 is below the 20-day moving average (MA) of 10.95, below the 50-day MA of 11.90, and below the 200-day MA of 13.12, indicating a bearish trend. The MACD of -0.39 indicates Positive momentum. The RSI at 36.60 is Neutral, neither overbought nor oversold. The STOCH value of 6.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PK.

Park Hotels & Resorts Risk Analysis

Park Hotels & Resorts disclosed 32 risk factors in its most recent earnings report. Park Hotels & Resorts reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Park Hotels & Resorts Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HST	74 Outperform	$9.19B	13.27	10.53%	6.09%	7.02%	-4.78%
APLE	72 Outperform	$2.75B	12.97	6.50%	8.34%	6.52%	14.45%
PK	68 Neutral	$1.89B	9.27	5.68%	10.68%	-3.67%	122.68%
Sector *	61 Neutral	$4.43B	16.13	-3.23%	11.37%	6.25%	-21.19%
PEB	58 Neutral	$1.01B	―	-0.16%	0.47%	2.35%	57.81%
RLJ	58 Neutral	$1.04B	24.88	2.94%	8.08%	3.31%	-15.16%
XHR	54 Neutral	$995.09M	63.66	1.24%	5.10%	1.33%	-10.65%

* Real Estate Sector Average

Performance Comparison

Park Hotels & Resorts

9.36

-6.68

-41.65%

HST

Host Hotels & Resorts

13.14

-6.34

-32.55%

PEB

Pebblebrook Hotel

8.43

-7.29

-46.37%

RLJ

RLJ Lodging

6.81

-4.40

-39.25%

XHR

Xenia Hotels & Resorts

9.81

-5.02

-33.85%

APLE

Apple Hospitality REIT

11.51

-3.63

-23.98%

Park Hotels & Resorts Earnings Call Summary

Earnings Call Date: Feb 19, 2025 | % Change Since: -26.82% | Next Earnings Date: May 5, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted Park Hotels & Resorts' strategic asset dispositions and successful redevelopment projects leading to strong performance in certain markets. However, challenges such as labor strikes in Hawaii, RevPAR decline in Q4, and significant debt maturities present concerns. The sentiment is cautiously optimistic with a focus on long-term growth and strategic investments.

Highlights

Strategic Asset Dispositions

In 2024, Park Hotels & Resorts strategically divested three hotels for a combined $200 million, improving RevPAR by $3 and EBITDA margin by over 30 basis points. The company plans to target $300 to $400 million in non-core asset sales in 2025 to further enhance portfolio quality and pay down debt.

Successful Redevelopments

The Bonnet Creek Resort in Orlando and Casa Marina Resort in Key West showed strong performance post-improvement. Bonnet Creek's RevPAR increased 17% and EBITDA exceeded $82 million, up 36% from the previous year. Casa Marina's RevPAR increased almost 29% since 2019, with EBITDA up 31% since 2019.

Positive Group Revenue Trends

Group revenue pace at the Bonnet Creek complex is up 15% for 2025, with expectations for continued growth due to new developments like Universal's $6 billion epic theme park opening.

Solid Operational Performance

Park Hotels ended Q4 with strong results, including a 30% RevPAR increase in Orlando and a 77% increase at Casa Marina. The Hilton Chicago saw nearly 15% growth in RevPAR and a 53 basis point improvement in EBITDA margin.

Royal Palm Resort Redevelopment

A $100 million investment is planned for the Royal Palm Resort in South Beach, expected to elevate its market positioning and potentially double its EBITDA post-renovation.

Lowlights

Hawaii Market Disruptions

The Hilton Hawaiian Village was negatively impacted by a 45-day labor strike and guest room renovations, resulting in a 540 basis point headwind to total portfolio RevPAR in Q4.

Q4 RevPAR Decline

Q4 RevPAR declined by 1.4%. Excluding strike impact, RevPAR increased by 3.1%, but the overall performance was below expectations.

Challenges in Miami

The Royal Palm renovation will result in a $17 million EBITDA displacement for 2025, and operations will be suspended into Q2 of 2026.

Debt Maturity Concerns

The $1.4 billion CMBS debt on Hawaiian Village and the Hyatt Regency Boston matures in the second half of 2026, posing a refinancing challenge.

Company Guidance

During the call, Park Hotels & Resorts Inc. provided guidance for 2025, indicating an anticipated RevPAR growth of 0% to 3%, reflecting challenges from the first quarter and planned closures. The company plans to aggressively pursue $300 to $400 million in non-core asset sales to enhance portfolio quality and reduce debt. Expected EBITDA margins for 2025 are forecasted between 20.1% and 27.7%, with anticipated adjusted EBITDA of $610 million to $670 million and adjusted FFO per share guidance of $1.90 to $2.20. Significant capital investments are planned, including a $100 million renovation of the Royal Palm Resort, anticipated to generate an IRR of 15% to 20% and potentially double the hotel's EBITDA. Group revenue pace at Bonnet Creek is up 15%, and the company expects RevPAR growth in the upper single digits with double-digit EBITDA growth at key resorts. The company remains focused on strategic capital recycling and operational excellence to unlock long-term value.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.