HGV - Embedded Expectations Analysis - 2021 04 15
Hilton Grand Vacations Inc. (HGV:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 37.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about timeshare demand, rising default rates, and their capital allocation strategiesSpecifically, management may have concerns about rising annualized default rates, developer maintenance fees, and the buildup of owner points. Furthermore, they may lack confidence in their ability to realize pent-up demand through 2022, ramp sales in the financing business, and continue executing efficient capital strategies. Moreover, management may be exaggerating the quantity of available hotel acquisition opportunities and the quality of their owner base. Finally, they may be concerned about a lack of seasonal tailwinds, their online sales capabilities, and their decision to put unused land up for sale
Hilton Grand Vacations is a timeshare company engaged in developing, marketing, selling and managing timeshare resorts under the Hilton Grand Vacations brand. The company's operations mainly consist of: selling vacation ownership intervals for it and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing its points-based Hilton Grand Vacations Club and Hilton Club exchange program. The company has properties located in vacation destinations such as the Orlando, Las Vegas, Hawaiian Islands, New York City, Washington D.C. and South Carolina. The company's segments are: real estate sales and financing and resort operations and club management.
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