A month has gone by since the last earnings report for Host Hotels (HST). Shares have added about 2.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Host Hotels & Resorts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Host Hotels' Q4 FFO Meets Estimates, Occupancy Up Y/Y

Host Hotels reported fourth-quarter AFFO per share of 44 cents, which was in line with the Zacks Consensus Estimate. The figure remained unchanged from the prior-year quarter.

Results reflected higher revenues, driven by year-over-year occupancy growth. The lodging REIT also issued a 2024 outlook for AFFO per share.

Per James F. Risoleo, president and CEO of the company, “Our results during the quarter were driven by rate increases of 0.4% and continued occupancy improvements at our convention and downtown hotels.”

Host Hotels generated total revenues of $1.32 billion, beating the Zacks Consensus Estimate of $1.30 billion. The top line rose 4.8% on a year-over-year basis.

In 2023, Host Hotels reported AFFO per share of $1.92, up from the prior year’s $1.79. The reported figure was in line with the Zacks Consensus Estimate. Total revenues of $5.31 billion increased 8.2% year over year and beat the consensus mark of $5.29 billion.

Behind the Headlines

Host Hotels’ comparable hotel RevPAR was $202.92 in the reported quarter, climbing 1.5% from the year-ago quarter’s $199.97 and 4.4% from the fourth-quarter 2019 tally of $194.32. The rise was mainly backed by occupancy and rate growth in the quarter. We projected the same to be $205.15.

Comparable hotel EBITDA came in at $355 million, falling 5.3% from $375 million reported a year ago. The figure, however, surpassed the fourth-quarter 2019 tally of $337 million.

The average room rate of $301.84 in the fourth quarter increased from $300.71 reported in the year-ago quarter. The figure compared favorably with the $256.94 reported in fourth-quarter 2019.

The comparable average occupancy percentage in the quarter was 67.2%, up 70 basis points from the prior-year quarter. However, the figure was lower than the comparable average occupancy of 75.6% in fourth-quarter 2019.

The room nights for its transient business declined 2.5% year over year. The group business and contract businesses witnessed growth of 4.7% and 11.4%, respectively, from the prior-year period. Host Hotels’ transient, group and contract businesses accounted for roughly 61%, 35% and 4% of its 2023 room sales, respectively.

Balance Sheet Position

Host Hotels exited the fourth quarter with cash and cash equivalents of $1.14 billion, up from $916 million as of Sep 30, 2023.

Host Hotels’ liquidity totaled $2.9 billion, including FF&E escrow reserves of $217 million as of Dec 31, 2023. It had $1.5 billion available under the revolver portion of the credit facility as of the same date.

During the reported quarter, the company repurchased 1.9 million shares at an average price of $16.50 per share through its common share repurchase program for $31 million. As of Dec 31, 2023, it had approximately $792 million of remaining capacity under the repurchase program.

Capital Expenditure

As of Dec 31, 2023, Host Hotels’ capital expenditure aggregated $646 million. Of this, $195 million was the total return on investment project spend, $274 million was renewal and replacement expenditure and $177 million was renewal and replacement insurable reconstruction.

2024 Outlook

Host Hotels projects full-year AFFO to be in the range of $1.92-$2.04.

It expects comparable hotel RevPAR to be in the range of $217-$233 million while adjusted EBITDAre is estimated between $1.590 billion and $1.680 billion. For 2024, management anticipates total capital expenditure in the range of $500-$605 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Host Hotels & Resorts has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Host Hotels & Resorts has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Host Hotels & Resorts is part of the Zacks REIT and Equity Trust - Other industry. Over the past month, Digital Realty Trust (DLR), a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended December 2023 more than a month ago.

Digital Realty Trust reported revenues of $1.37 billion in the last reported quarter, representing a year-over-year change of +11.1%. EPS of $0.08 for the same period compares with $1.65 a year ago.

For the current quarter, Digital Realty Trust is expected to post earnings of $1.62 per share, indicating a change of -2.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.

Digital Realty Trust has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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