Hilton Grand Vacations (HGV) delivered better-than-expected Q3 2021 results characterized by substantial cost synergy capture and member count increase. Revenue and earnings topped consensus estimates as the company integrated Diamond Resorts International.
Hilton Grand Vacations engages in the marketing and sale of vacation ownership intervals in select vacation destinations. It operates under Real Estate Sales and Financing, and Resort Operations, and Club Management business segments.
Revenue in Q3 climbed to $928 million compared to $208 million delivered the same quarter last year, exceeding consensus estimates of $357.73 million. The increase came as legacy HGV contract sales jumped 81% to $290 million, and Diamond Resorts contributed $143 million.
Net income improved to $99 million from a loss of $7 million delivered the same quarter last year. Consequently, Hilton Grand Vacations posted a diluted EPS of $0.90, up from a loss of $0.08 posted the same quarter last year and above consensus estimates of $0.38.
The company realized $70 million in substantial cost synergy capture related to the acquisition of Diamond Resorts. (See Top Smart Score Stocks on TipRanks)
During the quarter Hilton Grand Vacations completed the acquisition of Dakota Holdings, all but integrating Diamond Resorts International into its operations. With the acquisition, the company gains access to a robust portfolio of resorts and hotel properties.
Last month, Goldman Sachs analyst Stephen Grambling reiterated a Buy rating on the stock with a $63 price target, implying 21.9% upside potential to current levels. According to the analyst, Hilton Grand Vacations earnings has what it takes to nearly double by 2023 compared to pre-pandemic levels, In addition, the analysts expect strong free cash flow generation to trigger re-rating of the shares.
Consensus among analysts is a Moderate Buy based on one Buy.