Stock Analysis

Can You Imagine How Jubilant Hyatt Hotels' (NYSE:H) Shareholders Feel About Its 145% Share Price Gain?

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NYSE:H
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right stock, you can make a lot more than 100%. For example, the Hyatt Hotels Corporation (NYSE:H) share price has soared 145% in the last year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 22% gain in the last three months. However, the longer term returns haven't been so impressive, with the stock up just 12% in the last three years.

View our latest analysis for Hyatt Hotels

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the last twelve months Hyatt Hotels went from profitable to unprofitable. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. It may be that the company has done well on other metrics.

We are skeptical of the suggestion that the 0.9% dividend yield would entice buyers to the stock. Hyatt Hotels' revenue actually dropped 69% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:H Earnings and Revenue Growth March 18th 2021

Hyatt Hotels is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's good to see that Hyatt Hotels has rewarded shareholders with a total shareholder return of 145% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 14%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Hyatt Hotels (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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