Why Hilton Worldwide Holdings Inc.'s Shares Popped 16.7% Last Month

By Markets Fool.com

Image source: Hilton.

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What: Shares of hotel operator Hilton Worldwide Holdings Inc. jumped 16.7% in February after reporting earnings and some future asset sales.

So what: Revenue was up slightly to $2.86 billion and net income jumped from $159 million to $816 million, largely on a tax benefit. Management also said that they expect 3%-5% revenue per available room growth in 2016 and a 7%-9% increase in management and franchise fees. The bullish view on the future had to give investors confidence that the economy wouldn't be as big a drag on results as might have been feared.

The other big news was Hilton announcing that it will spin off its real estate assets into a publicly traded REIT and its timeshare business into another separate public company. We don't yet know what that will bring to shareholders, but this kind of financial engineering is often cheered short term by investors.

Now what: I wouldn't read too much into the spinoffs. They can sound good on paper, but spinning off assets isn't what Hilton, as a brand, is built to do. Instead, I think the solid results and very bullish outlook are what investors should focus on. The hotel business is running on all cylinders right now and with shares trading at just 14 times earnings, I think this stock has room to run higher this year.

The article Why Hilton Worldwide Holdings Inc.'s Shares Popped 16.7% Last Month originally appeared on Fool.com.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.