Intrinsic value of Hilton Worldwide Holdings - HLT

Previous Close

$83.38

  Intrinsic Value

$175.79

stock screener

  Rating & Target

str. buy

+111%

Previous close

$83.38

 
Intrinsic value

$175.79

 
Up/down potential

+111%

 
Rating

str. buy

We calculate the intrinsic value of HLT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.47
  26.10
  23.99
  22.09
  20.38
  18.84
  17.46
  16.21
  15.09
  14.08
  13.17
  12.36
  11.62
  10.96
  10.36
  9.83
  9.34
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.51
  6.36
  6.23
  6.10
  5.99
Revenue, $m
  11,663
  14,707
  18,235
  22,264
  26,801
  31,852
  37,413
  43,479
  50,041
  57,088
  64,609
  72,593
  81,029
  89,909
  99,227
  108,978
  119,161
  129,778
  140,833
  152,335
  164,294
  176,723
  189,640
  203,062
  217,013
  231,516
  246,598
  262,290
  278,623
  295,631
  313,350
Variable operating expenses, $m
 
  11,865
  14,586
  17,693
  21,193
  25,088
  29,377
  34,055
  39,116
  44,551
  50,352
  55,988
  62,494
  69,343
  76,529
  84,050
  91,904
  100,092
  108,619
  117,490
  126,713
  136,300
  146,261
  156,614
  167,373
  178,559
  190,192
  202,294
  214,891
  228,008
  241,675
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,828
  11,865
  14,586
  17,693
  21,193
  25,088
  29,377
  34,055
  39,116
  44,551
  50,352
  55,988
  62,494
  69,343
  76,529
  84,050
  91,904
  100,092
  108,619
  117,490
  126,713
  136,300
  146,261
  156,614
  167,373
  178,559
  190,192
  202,294
  214,891
  228,008
  241,675
Operating income, $m
  1,835
  2,842
  3,649
  4,571
  5,609
  6,764
  8,036
  9,424
  10,924
  12,536
  14,257
  16,605
  18,535
  20,566
  22,697
  24,928
  27,257
  29,685
  32,214
  34,845
  37,581
  40,424
  43,378
  46,448
  49,639
  52,957
  56,407
  59,996
  63,732
  67,623
  71,676
EBITDA, $m
  2,521
  3,938
  4,882
  5,961
  7,176
  8,528
  10,017
  11,641
  13,398
  15,285
  17,299
  19,437
  21,695
  24,073
  26,568
  29,179
  31,905
  34,748
  37,708
  40,787
  43,989
  47,317
  50,776
  54,369
  58,105
  61,988
  66,026
  70,228
  74,601
  79,155
  83,899
Interest expense (income), $m
  478
  369
  664
  1,007
  1,399
  1,840
  2,331
  2,872
  3,462
  4,101
  4,786
  5,518
  6,295
  7,115
  7,979
  8,885
  9,834
  10,824
  11,857
  12,933
  14,052
  15,215
  16,424
  17,680
  18,986
  20,343
  21,754
  23,221
  24,748
  26,336
  27,991
Earnings before tax, $m
  1,255
  2,474
  2,986
  3,564
  4,210
  4,924
  5,705
  6,551
  7,462
  8,436
  9,471
  11,087
  12,240
  13,451
  14,718
  16,042
  17,423
  18,861
  20,357
  21,912
  23,529
  25,209
  26,954
  28,768
  30,653
  32,614
  34,653
  36,775
  38,985
  41,286
  43,685
Tax expense, $m
  891
  668
  806
  962
  1,137
  1,329
  1,540
  1,769
  2,015
  2,278
  2,557
  2,993
  3,305
  3,632
  3,974
  4,331
  4,704
  5,092
  5,496
  5,916
  6,353
  6,806
  7,278
  7,767
  8,276
  8,806
  9,356
  9,929
  10,526
  11,147
  11,795
Net income, $m
  348
  1,806
  2,180
  2,602
  3,073
  3,594
  4,164
  4,782
  5,447
  6,158
  6,913
  8,093
  8,935
  9,819
  10,744
  11,711
  12,719
  13,768
  14,861
  15,996
  17,176
  18,402
  19,677
  21,001
  22,377
  23,808
  25,297
  26,846
  28,459
  30,139
  31,890

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,062
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  26,211
  31,696
  39,300
  47,982
  57,762
  68,646
  80,631
  93,704
  107,846
  123,034
  139,243
  156,449
  174,631
  193,769
  213,850
  234,865
  256,812
  279,694
  303,520
  328,309
  354,082
  380,869
  408,706
  437,634
  467,700
  498,956
  531,462
  565,281
  600,480
  637,135
  675,324
Adjusted assets (=assets-cash), $m
  25,149
  31,696
  39,300
  47,982
  57,762
  68,646
  80,631
  93,704
  107,846
  123,034
  139,243
  156,449
  174,631
  193,769
  213,850
  234,865
  256,812
  279,694
  303,520
  328,309
  354,082
  380,869
  408,706
  437,634
  467,700
  498,956
  531,462
  565,281
  600,480
  637,135
  675,324
Revenue / Adjusted assets
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
Average production assets, $m
  11,016
  13,883
  17,214
  21,017
  25,300
  30,068
  35,318
  41,044
  47,238
  53,891
  60,991
  68,527
  76,491
  84,874
  93,670
  102,875
  112,488
  122,510
  132,947
  143,805
  155,094
  166,827
  179,020
  191,691
  204,860
  218,551
  232,789
  247,602
  263,020
  279,075
  295,803
Working capital, $m
  873
  -191
  -237
  -289
  -348
  -414
  -486
  -565
  -651
  -742
  -840
  -944
  -1,053
  -1,169
  -1,290
  -1,417
  -1,549
  -1,687
  -1,831
  -1,980
  -2,136
  -2,297
  -2,465
  -2,640
  -2,821
  -3,010
  -3,206
  -3,410
  -3,622
  -3,843
  -4,074
Total debt, $m
  6,616
  11,851
  17,980
  24,977
  32,860
  41,633
  51,293
  61,830
  73,228
  85,469
  98,534
  112,402
  127,057
  142,482
  158,667
  175,606
  193,294
  211,737
  230,941
  250,921
  271,694
  293,285
  315,721
  339,037
  363,270
  388,463
  414,662
  441,920
  470,291
  499,835
  530,615
Total liabilities, $m
  20,312
  25,547
  31,676
  38,673
  46,556
  55,329
  64,989
  75,526
  86,924
  99,165
  112,230
  126,098
  140,753
  156,178
  172,363
  189,302
  206,990
  225,433
  244,637
  264,617
  285,390
  306,981
  329,417
  352,733
  376,966
  402,159
  428,358
  455,616
  483,987
  513,531
  544,311
Total equity, $m
  5,899
  6,149
  7,624
  9,308
  11,206
  13,317
  15,642
  18,179
  20,922
  23,869
  27,013
  30,351
  33,878
  37,591
  41,487
  45,564
  49,822
  54,261
  58,883
  63,692
  68,692
  73,889
  79,289
  84,901
  90,734
  96,798
  103,104
  109,664
  116,493
  123,604
  131,013
Total liabilities and equity, $m
  26,211
  31,696
  39,300
  47,981
  57,762
  68,646
  80,631
  93,705
  107,846
  123,034
  139,243
  156,449
  174,631
  193,769
  213,850
  234,866
  256,812
  279,694
  303,520
  328,309
  354,082
  380,870
  408,706
  437,634
  467,700
  498,957
  531,462
  565,280
  600,480
  637,135
  675,324
Debt-to-equity ratio
  1.122
  1.930
  2.360
  2.680
  2.930
  3.130
  3.280
  3.400
  3.500
  3.580
  3.650
  3.700
  3.750
  3.790
  3.820
  3.850
  3.880
  3.900
  3.920
  3.940
  3.960
  3.970
  3.980
  3.990
  4.000
  4.010
  4.020
  4.030
  4.040
  4.040
  4.050
Adjusted equity ratio
  0.192
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  348
  1,806
  2,180
  2,602
  3,073
  3,594
  4,164
  4,782
  5,447
  6,158
  6,913
  8,093
  8,935
  9,819
  10,744
  11,711
  12,719
  13,768
  14,861
  15,996
  17,176
  18,402
  19,677
  21,001
  22,377
  23,808
  25,297
  26,846
  28,459
  30,139
  31,890
Depreciation, amort., depletion, $m
  686
  1,095
  1,233
  1,390
  1,567
  1,764
  1,981
  2,218
  2,474
  2,749
  3,042
  2,832
  3,161
  3,507
  3,871
  4,251
  4,648
  5,062
  5,494
  5,942
  6,409
  6,894
  7,398
  7,921
  8,465
  9,031
  9,619
  10,231
  10,869
  11,532
  12,223
Funds from operations, $m
  1,814
  2,901
  3,413
  3,992
  4,641
  5,359
  6,146
  7,000
  7,921
  8,907
  9,956
  10,925
  12,096
  13,326
  14,615
  15,962
  17,367
  18,831
  20,354
  21,938
  23,585
  25,296
  27,074
  28,922
  30,842
  32,839
  34,916
  37,077
  39,327
  41,671
  44,113
Change in working capital, $m
  464
  -40
  -46
  -52
  -59
  -66
  -72
  -79
  -85
  -92
  -98
  -104
  -110
  -115
  -121
  -127
  -132
  -138
  -144
  -150
  -155
  -162
  -168
  -174
  -181
  -189
  -196
  -204
  -212
  -221
  -230
Cash from operations, $m
  1,350
  2,941
  3,459
  4,044
  4,700
  5,424
  6,218
  7,079
  8,006
  8,998
  10,053
  11,029
  12,206
  13,442
  14,736
  16,089
  17,499
  18,969
  20,498
  22,088
  23,740
  25,458
  27,242
  29,096
  31,024
  33,028
  35,112
  37,281
  39,540
  41,892
  44,344
Maintenance CAPEX, $m
  0
  -455
  -574
  -711
  -868
  -1,045
  -1,242
  -1,459
  -1,696
  -1,952
  -2,227
  -2,520
  -2,832
  -3,161
  -3,507
  -3,871
  -4,251
  -4,648
  -5,062
  -5,494
  -5,942
  -6,409
  -6,894
  -7,398
  -7,921
  -8,465
  -9,031
  -9,619
  -10,231
  -10,869
  -11,532
New CAPEX, $m
  -453
  -2,868
  -3,331
  -3,803
  -4,284
  -4,768
  -5,250
  -5,726
  -6,194
  -6,653
  -7,100
  -7,537
  -7,964
  -8,383
  -8,796
  -9,205
  -9,613
  -10,023
  -10,437
  -10,858
  -11,289
  -11,733
  -12,193
  -12,671
  -13,169
  -13,691
  -14,238
  -14,813
  -15,418
  -16,055
  -16,727
Cash from investing activities, $m
  -478
  -3,323
  -3,905
  -4,514
  -5,152
  -5,813
  -6,492
  -7,185
  -7,890
  -8,605
  -9,327
  -10,057
  -10,796
  -11,544
  -12,303
  -13,076
  -13,864
  -14,671
  -15,499
  -16,352
  -17,231
  -18,142
  -19,087
  -20,069
  -21,090
  -22,156
  -23,269
  -24,432
  -25,649
  -26,924
  -28,259
Free cash flow, $m
  872
  -382
  -446
  -470
  -453
  -389
  -274
  -107
  116
  394
  727
  972
  1,410
  1,898
  2,433
  3,013
  3,635
  4,298
  4,999
  5,737
  6,509
  7,316
  8,155
  9,028
  9,933
  10,871
  11,843
  12,849
  13,890
  14,968
  16,084
Issuance/(repayment) of debt, $m
  356
  5,268
  6,129
  6,998
  7,882
  8,773
  9,660
  10,537
  11,398
  12,241
  13,065
  13,868
  14,654
  15,425
  16,185
  16,938
  17,689
  18,443
  19,204
  19,980
  20,773
  21,591
  22,436
  23,316
  24,233
  25,193
  26,200
  27,258
  28,371
  29,544
  30,780
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  248
  5,268
  6,129
  6,998
  7,882
  8,773
  9,660
  10,537
  11,398
  12,241
  13,065
  13,868
  14,654
  15,425
  16,185
  16,938
  17,689
  18,443
  19,204
  19,980
  20,773
  21,591
  22,436
  23,316
  24,233
  25,193
  26,200
  27,258
  28,371
  29,544
  30,780
Total cash flow (excl. dividends), $m
  1,105
  4,886
  5,683
  6,528
  7,430
  8,384
  9,386
  10,430
  11,514
  12,635
  13,791
  14,840
  16,064
  17,323
  18,618
  19,951
  21,324
  22,741
  24,203
  25,716
  27,282
  28,906
  30,592
  32,344
  34,166
  36,064
  38,043
  40,107
  42,261
  44,512
  46,864
Retained Cash Flow (-), $m
  86
  -1,279
  -1,475
  -1,684
  -1,897
  -2,112
  -2,325
  -2,536
  -2,744
  -2,946
  -3,145
  -3,338
  -3,527
  -3,713
  -3,896
  -4,077
  -4,258
  -4,439
  -4,622
  -4,809
  -5,000
  -5,197
  -5,400
  -5,612
  -5,833
  -6,064
  -6,306
  -6,561
  -6,829
  -7,111
  -7,409
Prev. year cash balance distribution, $m
 
  1,029
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,636
  4,208
  4,843
  5,533
  6,273
  7,061
  7,894
  8,771
  9,689
  10,647
  11,502
  12,537
  13,611
  14,723
  15,874
  17,067
  18,302
  19,581
  20,907
  22,282
  23,709
  25,191
  26,732
  28,333
  30,000
  31,737
  33,546
  35,432
  37,401
  39,456
Discount rate, %
 
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
 
  4,296
  3,588
  3,770
  3,899
  3,966
  3,968
  3,903
  3,774
  3,587
  3,351
  3,037
  2,740
  2,426
  2,107
  1,795
  1,498
  1,224
  979
  766
  585
  436
  317
  224
  154
  103
  67
  42
  25
  15
  8
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company's segments include ownership, and management and franchise. Its global portfolio of owned and leased properties includes a range of hotels in gateway cities, such as New York City, London, San Francisco, Chicago, Sao Paolo and Tokyo. The Company's management and franchise segment manages hotels and licenses its brands to franchisees. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories.

FINANCIAL RATIOS  of  Hilton Worldwide Holdings (HLT)

Valuation Ratios
P/E Ratio 78.9
Price to Sales 2.4
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow 30.6
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.8%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 32
Current Ratio 0.6
LT Debt to Equity 111.6%
Total Debt to Equity 112.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 5.9%
Return On Equity - 3 Yr. Avg. 15.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 22.1%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 16.8%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 11.7%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 71%
Eff/ Tax Rate - 3 Yr. Avg. 39%
Payout Ratio 79.6%

HLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HLT stock intrinsic value calculation we used $11663 million for the last fiscal year's total revenue generated by Hilton Worldwide Holdings. The default revenue input number comes from 2016 income statement of Hilton Worldwide Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HLT stock valuation model: a) initial revenue growth rate of 26.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.9%, whose default value for HLT is calculated based on our internal credit rating of Hilton Worldwide Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Hilton Worldwide Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HLT stock the variable cost ratio is equal to 81.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for HLT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for Hilton Worldwide Holdings.

Corporate tax rate of 27% is the nominal tax rate for Hilton Worldwide Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HLT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HLT are equal to 94.4%.

Life of production assets of 24.2 years is the average useful life of capital assets used in Hilton Worldwide Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HLT is equal to -1.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5899 million for Hilton Worldwide Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 322.314 million for Hilton Worldwide Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Hilton Worldwide Holdings at the current share price and the inputted number of shares is $26.9 billion.

RELATED COMPANIES Price Int.Val. Rating
MAR Marriott Inter 140.60 476.36  str.buy
H Hyatt Hotels 81.29 18.09  str.sell
PCLN Priceline Grou 1,877.14 2,324.07  buy
CHH Choice Hotels 80.30 11.02  str.sell
LQ La Quinta Hold 19.23 1.89  str.sell
IHG InterContinent 65.02 17.87  str.sell
WYN Wyndham Worldw 119.75 73.94  sell

COMPANY NEWS

▶ Company News For Feb 15, 2018   [Feb-15-18 10:12AM  Zacks]
▶ Hotel Earnings Bonanza: Marriott, Hyatt, Hilton, Wyndham Top   [05:03PM  Investor's Business Daily]
▶ Hilton CEO Nassetta Says Shareholders to Benefit From Tax Cut   [Jan-23-18 10:38AM  Bloomberg Video]
▶ Hilton sets records during a year of innovation   [Jan-22-18 04:05PM  American City Business Journals]
▶ Embassy Suites by Hilton Opens in Midtown Manhattan   [Jan-18-18 08:00AM  Business Wire]
▶ Amid union clashes, another hotel aims to set up shop in Oakland   [Jan-17-18 06:39PM  American City Business Journals]
▶ [$$] Chinas HNA Group Uses More Valuable Assets to Borrow Money   [Jan-01-18 09:58PM  The Wall Street Journal]
▶ Eight Budget Travel Resolutions For 2018   [Dec-31-17 10:17AM  Forbes]
▶ [$$] China's HNA Group Uses More Valuable Assets to Borrow Money   [Dec-29-17 11:49PM  The Wall Street Journal]
▶ This No. 1-Ranked Leisure Stock May Be Planning A New Breakout   [04:05PM  Investor's Business Daily]
▶ CNBC's Annual Playbook: Travel & leisure   [Dec-26-17 02:42PM  CNBC Videos]
▶ Curio Collection by Hilton Debuts in Riviera Maya   [Dec-14-17 02:06PM  Business Wire]
▶ Five Companies Hit 52-Week Highs   [Dec-12-17 12:09PM  GuruFocus.com]
▶ Hilton Hotels to have presence on Navy Pier   [Dec-11-17 04:00PM  American City Business Journals]
▶ Seven Ways Hotels Will Change in 2018   [06:35AM  Bloomberg]
▶ Hilton CEO: Innovation is in our DNA   [Dec-06-17 02:31PM  CNBC Videos]
▶ HNA's airlines miss lease payments -report   [Dec-05-17 07:06PM  Reuters]
▶ Composite Rating For Hilton Worldwide Jumps To 96   [03:00AM  Investor's Business Daily]
▶ Five Companies Hit 52-Week Highs   [Nov-29-17 10:35AM  GuruFocus.com]
Financial statements of HLT
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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