STIFEL: H ($50.19, Hold) - Fine-Tuning Estimates

Fine-Tuning Estimates

Adjusting Estimates. We are adjusting our 2016 EPS estimate to $1.50 (from $1.52), 2017 EPS estimate to $1.58 (from $1.60) and our 2018 EPS estimate to $1.61(from $1.63) to account for lower RevPAR in 3Q.

Balance Sheet. We estimate, Hyatt’s unrestricted cash and cash equivalents balance is over $400 million and its consolidated debt was $1.5 billion. The company has $1.5 billion of line capacity. Net debt-to-EV of 22.0% is in-line with the industry average of 21.9%, and net debt-to-2017E EBITDA is 2.4x, slightly above the industry average of 2.2x.

Valuation. Shares currently trade at a 10.4% discount to our $56.00 estimated NAV, which reflects a 12.0x multiple on franchise and management fees, an 11.0x multiple on owned real estate, and a 7.0x multiple on unconsolidated ventures on 2017 EBITDA estimates. Shares also trade at an 10.8x multiple on our normalized 2017E EBITDA of $789 million. Our estimate excludes the $32 million of stock-based compensation.