Playa Hotels & Resorts (PLYA) AI Stock Analysis

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Playa Hotels & Resorts

(NASDAQ:PLYA)

72Outperform

Playa Hotels & Resorts shows a promising recovery trajectory with strong financial stability and growth in direct bookings. However, valuation concerns and operational challenges, such as those in Jamaica and construction disruptions, present notable risks. Despite these challenges, the agreement with Hyatt and improved guest mix provide a positive outlook for future growth.

Positive Factors

Acquisition

The acquisition is a logical fit for PLYA and a natural progression for Hyatt's growth in the all-inclusive space.

Shareholder Value

The acquisition is seen as a favorable move that unlocks value for PLYA shareholders.

Valuation

The $13.50 acquisition price represents a 10.75x multiple on the NTM EBITDA estimate, indicating a favorable valuation compared to historical averages.

Negative Factors

Investment Rating

Analyst is lowering investment rating to Hold from Buy.

Stock Rating

Given PLYA shares are trading near the acquisition price, the rating is being moved to Perform from Outperform.

Target Price

The target price is lowered to $13.50, which is equal to the proposed acquisition price.

Playa Hotels & Resorts (PLYA) vs. S&P 500 (SPY)

Market Cap

$1.71B

Dividend YieldN/A

Average Volume (3M)5.32M

Price to Earnings (P/E)24.7

Beta (1Y)0.71

Revenue Growth-3.87%

EPS Growth60.57%

CountryUS

Employees13,000

SectorConsumer Cyclical

Sector Strength58

IndustryGambling, Resorts & Casinos

Share Statistics

EPS (TTM)0.54

Shares Outstanding127,827,580

10 Day Avg. Volume3,029,129

30 Day Avg. Volume5,322,303

Financial Highlights & Ratios

PEG Ratio0.41

Price to Book (P/B)N/A

Price to Sales (P/S)1.75

Price to Cash Flow (P/CF)10.10

P/FCF Ratio14.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$13.25

Price Target Upside-1.34% Downside

Rating ConsensusHold

Number of Analyst Covering5

Playa Hotels & Resorts Business Overview & Revenue Model

Company DescriptionPlaya Hotels & Resorts (PLYA) is a leading owner, operator, and developer of all-inclusive resorts in prime beachfront locations across the Caribbean and Mexico. The company specializes in providing luxury vacation experiences through its portfolio of brands, which include Hyatt Ziva, Hyatt Zilara, Hilton All-Inclusive, and other independent resorts. Playa Hotels & Resorts focuses on delivering high-quality accommodations, dining, and entertainment options, catering primarily to leisure travelers seeking premium all-inclusive experiences.

How the Company Makes MoneyPlaya Hotels & Resorts generates revenue primarily through the operation and management of all-inclusive resorts. The company's key revenue streams include room bookings, which encompass accommodation fees and ancillary services such as food and beverage offerings, spa services, and on-site entertainment. Playa also enters into strategic partnerships with major hospitality brands like Hyatt and Hilton, leveraging their brand recognition and loyalty programs to attract a broader customer base. Additionally, Playa benefits from economies of scale and cost efficiencies achieved through its portfolio, enhancing profitability. The company may also derive income from resort management fees and potential development projects or property sales.

Playa Hotels & Resorts Financial Statement Overview

Summary

Playa Hotels & Resorts has shown a strong recovery post-pandemic, with improved revenue and gross profit margin, although recent revenue decline poses a challenge. The elimination of debt enhances financial stability, and positive operating cash flow indicates strong operational performance. However, the decrease in stockholders' equity and fluctuating free cash flow growth highlight areas for improvement.

Income Statement

Positive

Playa Hotels & Resorts has shown a consistent recovery in revenue since the pandemic, with a significant revenue growth rate from 2020 to 2023. The gross profit margin in the latest period was strong at 100%, indicating efficient cost management. However, there was a decline in revenue from 2023 to 2024. Net profit margin improved over the years but remains modest, suggesting room for profitability enhancement.

Balance Sheet

Positive

The company has strengthened its financial position, eliminating total debt by 2024, which improves financial stability. The equity ratio is moderate, indicating a healthy balance between equity and liabilities. Return on Equity has improved, reflecting better utilization of shareholders' funds. However, the stockholders' equity has decreased from previous years, which may pose risks if not managed properly.

Cash Flow

Positive

Operating cash flow has been positive and growing, indicating strong cash generation from operations. The free cash flow growth has fluctuated, but recent figures are positive, providing a cushion for future investments. The operating cash flow to net income ratio suggests efficient conversion of income into cash, though free cash flow to net income ratio shows variability, reflecting investment levels.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
938.57M	977.50M	856.26M	534.64M	273.19M
	Gross Profit
440.40M	461.06M	387.53M	201.85M	61.17M
	EBIT
173.91M	175.00M	129.77M	-1.02M	-135.59M
	EBITDA
249.71M	255.58M	207.91M	57.27M	-98.83M
	Net Income Common Stockholders
73.81M	53.85M	56.71M	-89.68M	-262.37M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
189.28M	272.52M	283.94M	270.09M	146.92M
	Total Assets
1.82B	1.93B	2.07B	2.06B	2.10B
	Total Debt
1.08B	1.07B	1.07B	1.14B	1.25B
	Net Debt
888.11M	797.58M	781.51M	869.23M	1.10B
	Total Liabilities
1.34B	1.38B	1.40B	1.43B	1.53B
	Stockholders Equity
481.89M	554.80M	664.86M	630.83M	568.14M
Cash Flow		Free Cash Flow
16.25M	89.95M	129.01M	12.00M	-137.30M
	Operating Cash Flow
113.12M	136.37M	158.23M	29.64M	-99.94M
	Investing Cash Flow
-33.19M	50.53M	-27.15M	73.40M	29.41M
	Financing Cash Flow
-163.17M	-198.33M	-140.71M	17.67M	222.46M

Playa Hotels & Resorts Technical Analysis

Technical Analysis Sentiment

Positive

Last Price13.43

Price Trends

50DMA

13.33

Positive

100DMA

12.42

Positive

200DMA

10.34

Positive

Market Momentum

MACD

0.04

Positive

RSI

62.52

Neutral

STOCH

84.22

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PLYA, the sentiment is Positive. The current price of 13.43 is above the 20-day moving average (MA) of 13.35, above the 50-day MA of 13.33, and above the 200-day MA of 10.34, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 62.52 is Neutral, neither overbought nor oversold. The STOCH value of 84.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PLYA.

Playa Hotels & Resorts Risk Analysis

Playa Hotels & Resorts disclosed 47 risk factors in its most recent earnings report. Playa 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

Playa Hotels & Resorts Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PLYA	72 Outperform	$1.71B	24.72	14.24%	―	-3.87%	60.57%
MCRI	68 Neutral	$1.40B	19.82	18.25%	1.58%	4.13%	17.73%
HGV	65 Neutral	$3.16B	72.30	2.43%	―	25.21%	-83.25%
Sector *	60 Neutral	$6.55B	11.40	3.24%	4.25%	2.38%	-21.28%
VAC	58 Neutral	$1.83B	9.42	9.04%	5.84%	5.08%	-10.62%
PENN	42 Neutral	$2.29B	―	-10.27%	―	3.38%	38.18%
MLCO	41 Neutral	$2.02B	50.05	25.40%	―	22.86%	―

* Consumer Cyclical Sector Average

Performance Comparison

PLYA

Playa Hotels & Resorts

13.43

4.27

46.62%

VAC

Marriott Vacations Worldwide Corporation

53.06

-46.19

-46.54%

MLCO

Melco Resorts & Entertainment

4.90

-1.37

-21.85%

MCRI

Monarch Casino & Resort

77.82

9.95

14.66%

PENN

Penn National Gaming

15.20

-2.64

-14.80%

HGV

Hilton Grand Vacations

33.75

-11.04

-24.65%

Playa Hotels & Resorts Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: 0.90% | Next Earnings Date: May 5, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed sentiment. On the positive side, the agreement with Hyatt and strong fourth-quarter performance were significant achievements, along with improvements in direct booking and guest mix. However, the impact of Hurricane Barrel, challenges in Jamaica, and construction disruptions in the Pacific Coast posed notable challenges.

Highlights

Agreement with Hyatt Hotels Corporation

Playa Hotels & Resorts entered into an agreement with Hyatt Hotels Corporation, where Hyatt will acquire all outstanding shares of Playa for $13.50 per share in cash. This transaction is considered an outstanding result for shareholders.

Strong Fourth Quarter Performance

Results exceeded expectations due to strong demand across all segments and a phenomenal holiday season. Owned resort EBITDA was $67.1 million, with better than expected ADR growth in the Pacific Coast, Yucatan, and Dominican Republic.

Increase in Direct Booking

During Q4 2024, 47.6% of Playa owned and managed transient revenues were booked direct, up 30 basis points year over year. The direct sourcing mix improved by over 20 percentage points compared to 2019, enhancing competitive advantage.

Geographical Guest Mix Improvement

South American, European, and Canadian guest mix improved significantly year over year, with European and South American guest mix at 175% versus pre-pandemic levels.

Lowlights

Impact of Hurricane Barrel

Hurricane Barrel continued to impact performance, with underlying owned resort EBITDA growth down approximately 15% for the total portfolio in Q4 2024.

Challenges in Jamaica

The US State Department travel advisory impacted the Jamaican segment, resulting in a 50% decline in resort EBITDA in Q4 2024, and an approximate $25 to $30 million impact for the fiscal year.

Construction Disruption in Pacific Coast

Ongoing renovation work caused year-over-year occupancy decline, with underlying profits in the Pacific Coast falling by 19.6% for the fiscal year.

Company Guidance

During the fourth quarter of 2024, Playa Hotels & Resorts exceeded expectations despite numerous challenges, including Hurricane Barrel and construction disruptions on the Pacific Coast. The company's owned resort EBITDA reached $67.1 million, bolstered by $1.1 million in business interruption insurance proceeds and a $2 million foreign currency exchange tailwind, contributing to a 200 basis points margin improvement. Despite a 15% decrease in underlying owned resort EBITDA growth, segments like the Dominican Republic reported a 9% profit increase, while Jamaica faced a significant 50% decline in resort EBITDA. Revenue from direct bookings increased to 47.6% of transient revenues, reflecting a strategic focus on direct channels. Additionally, Playa repurchased approximately $25 million in stock, marking a cumulative $376 million since September 2022, and capital expenditures for the year were lower than anticipated. The company's guest mix saw improvements from South American, European, and Canadian visitors, with efforts to normalize their American guest mix to pre-pandemic levels.

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.