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Why Did HGV Stock Fall Despite Three-Fold Rise in Q1 Revenues?

Global timeshare company Hilton Grand Vacations, Inc. (NYSE: HGV) has reported mixed results for the first quarter of 2022. Earnings came in at $0.42 per share, compared with a loss of $0.08 per share in the first quarter of last year. The figure, however, missed analysts’ estimates of $0.64 per share.

Revenues more than tripled year-over-year to $779 million and exceeded expectations of $763.9 million. Adjusted EBITDA increased to $202 million from $42 million in the same quarter last year.

Revenues of the Real Estate Sales and Financing segment rose $329 million year-over-year to $452 million. Further, revenues of the Resort Operations and Club Management segment rose $188 million to $268 million.

Other Highlights

The company’s board has authorized a two-year share repurchase program of $500 million. Further, Hilton Grand Vacations expects cost synergies of $150 million within 24 months of completing the acquisition of Diamond. The transaction closed in August last year.

Hilton Grand Vacations ended the quarter with total cash and cash equivalents of $817 million.

CEO’s Comments

The President and CEO of Hilton Grand Vacations, Mark Wang, said, “We delivered EBITDA, margins, and cash flow well ahead of our 2019 pro-forma combined levels, and our diligent integration efforts enabled us to identify additional cost synergies from the Diamond acquisition. Taken together, these gave us the confidence to increase our 2022 guidance range.”

The Florida-based company has raised its adjusted EBITDA guidance range to $960 million-$990 million, from the earlier range of $915 million-$935 million.

About Hilton Grand Vacations

Owned by Hilton Hotels (NYSE: HLT), Hilton Grand Vacations develops, markets and operates vacation ownership resorts at select destinations. The company operates properties of more than 715,000 owners.

Price Target

Based on two Buys, the stock has a Moderate Buy consensus rating. HGV’s average price target of $66 implies 58.8% upside potential from current levels. Shares have lost 20.6% over the past six months.

Conclusion

Following the announcement of the results on Monday, HGV stock slipped almost 5% to close at $41.56. The market did not react positively to the revenue beat and profit figures and was rather put off by the earnings miss.

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