Last update on 2024-06-05

Hilton Worldwide Holdings (HLT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

In 2023, Hilton Worldwide Holdings (HLT) scores 5/9 in a detailed Piotroski F-Score analysis. Explore insights on HLT's profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 5

We're running Hilton Worldwide Holdings (HLT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Hilton Worldwide Holdings (HLT) scored a 5 out of 9 on the Piotroski F-Score, indicating a mixed financial position. Here's how they performed: Profitability: Positive net income ($1.141 billion) and operating cash flow ($1.946 billion) netted 2 points, despite a dip in ROA. Liquidity: The current ratio decreased, and leverage increased, earning 0 points in these areas. A reduction in outstanding shares added 1 point. Operating Efficiency: Mixed results with a decrease in gross margin but an increase in asset turnover ratio, earning 1 point. Overall, HLT had strengths in profitability and operational efficiency but showed weaknesses in liquidity and leverage.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score, Hilton Worldwide Holdings (HLT) could be a potential investment, but with caution. The mixed score suggests they have strengths, particularly in profitability and operating cash flow, but also face some challenges in liquidity and leverage. If you are considering adding HLT to your portfolio, it would be wise to further scrutinize the financial strategies, market conditions, and potential risks associated with increased debt and lower liquidity. Their history of resilience, especially recovering post-pandemic, can be a good indicator, but ensure to consider all angles before making a decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Hilton Worldwide Holdings (HLT)

Company has a positive net income?

Net income is the total profit of a company after all expenses and taxes have been subtracted. It is a fundamental measure of a company's profitability.

As of 2023, Hilton Worldwide Holdings (HLT) reported a net income of $1,141,000,000, which is positive. This contributes positively to the Piotroski score by adding 1 point. Over the last 20 years, the company's net income fluctuated, with notable high points in 2015 ($1.404 billion) and some downturns like in 2020, where it was -$715 million, likely due to the impacts of the COVID-19 pandemic. Overall, the recent positive net income signifies a recovery and consistent profitability, reflecting well on the company's financial health and growth potential.

Company has a positive cash flow?

Cash Flow from Operations (CFO) shows how much cash a company generates from its core operations. It is crucial in assessing a company's ability to generate sufficient cash flow to maintain or grow operations.

The Cash Flow from Operations (CFO) for Hilton Worldwide Holdings (HLT) in 2023 amounted to $1.946 billion, indicating a positive trend. Positive CFO means the company is generating sufficient cash from its core business activities, which is highly favorable. Historically, Hilton’s CFO over the past two decades has demonstrated consistent growth, peaking at $2.101 billion in 2013. Despite fluctuations in certain years, the trend has been upwards overall. The figure for 2023 being the highest since 2013 signifies robust operational cash activities. Therefore, Hilton Worldwide Holdings earns a full point for this criterion, reflecting strong cash generation capacity. This positive CFO highlights the company's operational efficiency and sustainability.

Return on Assets (ROA) are growing?

Change in ROA assesses whether the company's return on assets has improved from one year to the next, indicating better utilization of its assets.

In 2023, Hilton Worldwide Holdings (HLT) reported an ROA of 0.0738, which is a decline from the 0.0811 reported in 2022. This represents a negative trend as the ROA has not increased, thereby not fulfilling this criterion within the Piotroski Score, resulting in 0 points being assigned. The 20-year historical ROA data further indicates that Hilton's asset efficiency fluctuates considerably when compared to the industry median, which significantly outperforms HLT’s ROA. For instance, the industry medians for 2022 and 2023 stand at 0.3855 and 0.3256, respectively—substantially higher than HLT's performance in those years. This consistent underperformance suggests that Hilton needs to optimize its asset utilization strategies to augment its ROA.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income: This criterion compares the company's operating cash flow with its net income. It is important because it indicates if a company is generating sufficient cash from its core operations to cover its net income, showcasing operational efficiency and financial health.

Hilton Worldwide Holdings (HLT) boasts an operating cash flow of $1,946,000,000 compared to a net income of $1,141,000,000 in 2023. Given that the operating cash flow is higher than the net income, adding 1 point to the Piotroski score is warranted. This trend is favorable, highlighting Hilton's robust cash-generating capabilities from its core operations. Analyzing historical data, Hilton's operating cash flow has demonstrated considerable growth, particularly in recent years, signifying consistent operational strength.\n\nThe historical cash flow data reveals remarkable resilience with a visible uptrend from $492,000,000 in 2003 to $1,946,000,000 in 2023. Complementary net income data, however, oscillates over the same period, demonstrating occasional volatility. For instance, outrageous growth in net income to $1,404,000,000 in 2015 contrasted starkly a net loss of $715,000,000 in 2020, due to the pandemic.\n\nYet, the operating cash flow remained relatively stable even amidst these challenges, underscoring Hilton's effective operational framework. Consequently, this uptrend in operating cash flow over net income enhances confidence in Hilton’s financial strategy, meriting a solid 1 point in the Piotroski score.

Liquidity of Hilton Worldwide Holdings (HLT)

Leverage is declining?

Change in leverage is calculated to determine the financial risk of a company. Increasing leverage indicates higher debt levels relative to equity.

In 2023, Hilton Worldwide Holdings (HLT) showed an increase in leverage from 0.615 to 0.647, thus indicating that the company has added more debt relative to its equity as compared to the previous year. Over the past 20 years, leverage has fluctuated significantly, peaking at 0.6805 in 2020 and hitting a low of 0.0237 in 2016. This upward trend in 2023 might suggest a strategic move that could involve more risk, especially if not accompanied by potential revenue growth or operational improvements. This increase in leverage results in 0 points for this sub-criterion in the Piotroski Analysis.

Current Ratio is growing?

Explain the criterion for Hilton Worldwide Holdings (HLT) and why it is important to consider

The current ratio, a measure of liquidity, used for evaluating a company's ability to pay off short-term obligations, has decreased from 0.8511 in 2022 to 0.7023 in 2023.

Number of shares not diluted?

The criterion evaluates the change in shares outstanding over the given period to assess financial stability and potential shareholder value.

In 2023, Hilton Worldwide Holdings (HLT) saw a decrease in outstanding shares from 275 million in 2022 to 262 million. This reduction typically signifies a positive move for shareholders as it often indicates share buybacks, which reduce the number of shares on the market and can increase the value of remaining shares. Therefore, HLT earns 1 point for this criterion. Over the past 20 years, the company's outstanding shares have seen various fluctuations, peaking at around 330 million and demonstrating a strategic approach to managing share count.

Operating of Hilton Worldwide Holdings (HLT)

Cross Margin is growing?

Change in Gross Margin assesses whether Hilton Worldwide Holdings has improved its profitability by comparing current gross margins to those from a previous year.

The Gross Margin of Hilton Worldwide Holdings (HLT) has decreased from 0.3075 in 2022 to 0.2863 in 2023. This trend is unfavorable as it indicates a reduction in profitability. The Gross Margin is a critical measure of operational efficiency, representing the proportion of revenue that exceeds the cost of goods sold. Lower gross margins suggest increased costs or reduced pricing power, either of which can negatively impact the bottom line. Analyzing the historical data, Hilton's Gross Margin has fluctuated over the past 20 years. For example, it peaked at 0.3075 in 2022 but had been as low as 0.1354 in 2020 during the pandemic. However, the current Gross Margin remains below the 20-year industry median, which stood at 0.3256 in 2023. This discrepancy may indicate that Hilton is facing more operational challenges compared to its industry peers. Given this decrease, no point should be awarded.

Asset Turnover Ratio is growing?

Change in Asset Turnover for Hilton Worldwide Holdings (HLT)

Comparing the Asset Turnover ratios, Hilton Worldwide Holdings (HLT) showed an increase from 0.5669 in 2022 to 0.6622 in 2023. In simpler terms, Asset Turnover measures the efficiency with which a company utilizes its assets to generate sales. A rise in this ratio typically indicates that the company is utilizing its assets more effectively to generate revenue. This increase in Asset Turnover is akin to an increase in operational efficiency and thus adds 1 point in the Piotroski F-Score analysis for 2023.\n\nHistorically, when observing the trajectory of the Asset Turnover Ratio over the past 20 years, a volatile pattern is discernible. With ratios as high as 0.9791 in 2010 and as low as 0.2716 in 2020, it's unmistakable that Hilton has weathered various operational cycles. Notably, the recent upswing in the ratio aligns with its post-pandemic recovery phase, reflecting heightened adeptness in asset utilization. Thus, this increment for 2023 is a promising indicator for the company.