Hilton Grand Vacations Outperforms Amid Travel + Leisure Upgrade, Sees Strong Sales and Profitability

Hilton Grand Vacations (HGV) outperformed Travel + Leisure after Mizuho upgraded the latter to Outperform from Neutral, raising the price target to $72 from $63. HGV's contract sales increased 10% to $721 million, and adjusted EBITDA reached $248 million with 22% margins excluding reimbursements. BPG grew 15% to over $4,100, and the company repurchased $150 million worth of stock. However, the macroeconomic environment has become more volatile, and tour growth was down 4% due to efficiency programs and sales center closures. Real estate profit margins decreased by 200 basis points.

Hilton Grand Vacations (HGV) has seen significant performance improvements, with contract sales increasing by 10% to $721 million and adjusted EBITDA reaching $248 million, representing a 22% margin excluding reimbursements. Additionally, the company repurchased $150 million worth of stock, indicating a positive outlook on its financial health. However, the macroeconomic environment has introduced volatility, leading to a 4% decrease in tour growth due to efficiency programs and sales center closures. Real estate profit margins also decreased by 200 basis points.

In contrast, Travel + Leisure (TNL) has been a strong performer over the past year, with shares gaining about 40%. The company reported solid Q2 results, pushing shares to a new 52-week high. While Q2 EPS was mixed, the underlying composition of earnings was solid, with better credit quality on its loan portfolio supporting future earnings. Vacation ownership revenue grew by 6%, and net vacation sales were up about 7% from last year. However, travel and membership revenue fell by 6% due to an 11% decline in exchange transactions, which drove a modest EPS miss [2].

Mizuho recently upgraded TNL to "Outperform" from "Neutral," raising the price target to $72 from $63. This upgrade reflects the company's strong performance and positive outlook, particularly in the vacation ownership business. TNL's VOI sales activity has been encouraging, with net vacation sales up 7% and gross sales up 9%. Despite the decline in exchange transactions, the company's focus on expanding its VOI business has been successful in driving growth.

While both companies have shown resilience in the face of economic uncertainty, HGV's recent performance has been more robust, with significant increases in contract sales and adjusted EBITDA. However, TNL's focus on its vacation ownership business and the positive outlook from Mizuho analysts suggest that it may continue to outperform in the coming quarters.

References:
[1] https://www.nasdaq.com/articles/hilton-grand-vacations-hgv-earnings-expected-grow-what-know-ahead-next-weeks-release
[2] https://seekingalpha.com/article/4804186-travel-plus-leisure-improved-sales-and-loan-quality-provide-further-upside