Why Huazhu Group Stock Jumped Today
What happened
Shares of Huazhu Group (NASDAQ: HTHT) were moving higher today after the Chinese hotel operator turned in a strong fourth-quarter earnings report, beating estimates on the top and bottom lines. As a result, the stock was up 7.7% as of 12:12 p.m. EDT, after gaining as much as 16.1% earlier in the trading session.
So what
Huazhu said revenue increased 20.6% in the quarter to $390.3 million, beating estimates of $378.4 million; the company added 214 new hotels, to grow its hotel network by 13% year over year to 4,230. Revenue per available room (RevPAR), a key industry metric, rose 10%, as the average daily rate increased 9%.
Gross margin surged from 27.1% to 35.3%, due to the increase in RevPAR, as the percentage of franchised hotels increased. Selling and marketing, and general and administrative expenses, also came down as a percentage of revenue; this drove operating income up 156% to $58.1 million.
Adjusted earnings per share rose from $0.10 a year ago to $0.17, topping expectations for $0.13.
CEO Jenny Zhang called the results "strong" and touted the company's future growth opportunities:
Now what
Huazhu's guidance called for more solid growth this year as it forecast an increase in revenue of 15% to 17%, ahead of the analyst consensus. Considering the slowdown in the Chinese economy, Huazhu's growth looks especially impressive, and its strong pipeline should continue to deliver results for investors.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.