Oil prices are soaring as the Russian invasion of Ukraine raises oil supply concerns. International benchmark Brent Crude fell 1.2% to $109.81 a barrel on Thursday, while US crude prices per barrel jumped 5.7% before ending down 2.5%. Both benchmarks are up more than 40% for 2022, and the The US oil benchmark briefly topped $130 a barrel this week.
In addition, soaring gas prices due to the Russian-Ukrainian war replaced COVID-19 fears as the main dissuasive to travel this spring and summer. The travel industry could face significant headwinds from rising oil and gas prices. Moreover, globally Jet fuel prices hit nearly 14-year highs align with crude oil supply shortages. In turn, fare hikes are expected to undermine the recovery of air travel.
Against this backdrop, we believe travel and tourism stocks are fundamentally weak Hyatt Hotels Corporation (H), Norwegian Cruise Line Holdings Ltd. (NCLH), MakeMyTrip Limited (MMYT), Lindblad Expeditions Holdings, Inc. (LIND), and Inspirato Incorporated (ISPO) are best avoided for now.
Hyatt Hotels Corporation (H)
Based in Chicago, H is a hospitality company that operates in the United States and internationally. The Company operates through owned and leased hotels; management and franchising of the Americas; ASPAC management and franchising; Management and franchising EAME/SO Asia; and Apple Leisure Group.
On Feb. 8, H announced that a subsidiary of Hyatt had entered into a franchise agreement with Thera Island Suites SA, owner of Magma Resort Santorini, and that Athens-based SWOT Hospitality would operate the hotel. The hotel is expected to develop the H brand footprint, but it may take some time before substantial gains can be made from this venture.
For its fourth fiscal quarter, which ended Dec. 31, H’s total revenue rose 153.8% year-over-year to $1.08 billion. However, its adjusted net loss attributable to H increased 70.9% from the year-ago quarter to $306 million, while its loss per share, adjusted for special items, increased 57.1%. % over the same period last year to reach $2.78.
Analysts expect H PES to arrive at a negative $0.36 for its fiscal quarter, ending March 32, 2022.
The stock is down 5.3% year-to-date and 9.7% over the past month to close yesterday’s trading session at $90.86.
H’s POWR ratings reflect this bleak outlook. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
H has a Value, Stability, Sentiment, and Quality rating of D. In the Travel Industry – Hotels/Resorts at 22 stocks, it is ranked No. 21.
Click here to see additional POWR ratings for H (growth and dynamics).
Norwegian Cruise Line Holdings Ltd. (NCLH)
NCLH in Miami is a cruise line that operates in North America, Europe, Asia Pacific and globally. The company operates through the Norwegian Cruise Line, Oceania Cruises and Regent Seven Cruises brands. It offers itineraries ranging from three days to 180 days, calling at various destinations.
On February 23, NCLH announced that in connection with its previously announced private offering of $435.0 million of 2.50% exchangeable senior notes due 2027, initial purchasers have notified the company of their intention to purchase an additional $38.175 million in exchangeable tickets. The deals, however, could represent a burden of debt for the company.
NCLH’s operating loss rose 25.6% year-over-year to $686.87 million in its fiscal fourth quarter, which ended Dec. 31. Its loss per share rose 59.8% from the same period a year earlier to $4.01. And its adjusted net loss rose 11.9% from the year-ago period to $765.03 million.
The Street expects NCLH’s EPS to be negative $1.42 for the quarter ending March 31, 2022.
Over the past year, the stock price is down 39.7% and down 14.2% year-to-date to close yesterday’s trading session at $17.80.
It’s no surprise that NCLH has an overall F rating, which translates to a strong sell in our POWR rating system.
NCLH has an F rating for value, stability, sentiment, and quality. It is ranked #2 out of four travel industry stocks – Cruises. The industry is rated F.
To view additional POWR ratings for growth and momentum for NCLH, click here.
MakeMyTrip Limited (MMYT)
MMYT, based in Gurugram, India, operates as an online travel agency that sells travel products and solutions in India, USA, Singapore, Malaysia, Thailand, UAE, Peru and in Indonesia. The company operates through airline ticketing; Hotels and Packages; and the Bus Ticketing segments.
For its third fiscal quarter, ended Dec. 31, MMYT’s loss for the period increased 158.4% year-on-year to $9.04 million. Its loss per share increased 166.7% from the year-ago quarter to $0.08. And for the nine months ended Dec. 31, the company’s cash and cash equivalents balance was $178.37 million, down 9.5% from the reporting period. last year.
The negative consensus EPS estimate of $0.17 for the fiscal quarter, ending March 31, 2022, indicates a 466.7% year-over-year decrease. And the consensus revenue estimate of $78.74 million for the same period reflects a 0.6% decline from the year-ago quarter.
MMYT shares are down 32.1% over the past year and 17.4% year-to-date to close yesterday’s trading session at $22.89.
This poor outlook is reflected in MMYT’s POWR ratings. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system.
MMYT has a value, stability, sentiment and quality rating of D. In the 73-stock Internet industry, it is ranked No. 68. The industry is rated F.
Click here to view additional POWR Ratings for Growth and Momentum for MMYT.
Lindblad Expeditions Holdings, Inc. (LIND)
LIND in New York is a provider of expedition cruise and overland adventure travel experiences. The company’s offerings include voyages on a fleet of expedition vessels and seasonal charter vessels under the Lindblad brand.
On January 21, LIND announced that its subsidiary had priced $360 million of 6.750% senior secured notes due 2027. The company intends to use the net proceeds of the offering to prepay all of its outstanding borrowings under its existing term loan.
LIND’s operating loss rose 1.5% year-over-year to $29.53 million in its fourth fiscal quarter, which ended Dec. 31. its cash, cash equivalents and restricted cash balance were $172.69 million, down 15.6% from a year earlier.
Analysts expect LIND’s EPS to remain negative at least through its 2022 financial year.
The stock price is down 30.6% over the past year and 11.3% year-to-date to close yesterday’s trading session at $13.84.
LIND has an overall F rating, which translates to a strong sell in our POWR rating system.
LIND has an F rating for sentiment and a D rating for value and quality. It is ranked #1 in the Travel Industry – Cruises.
Click here to see additional POWR ratings for LIND (Growth, Dynamics and Stability).
Inspirato Incorporated (ISPO)
ISPO operates as a luxury subscription travel agency that offers affluent travelers access to a managed portfolio of select vacation options. The Denver, Colorado-based company went public on Feb. 14 after a business combination with Thayer Ventures Acquisition Corporation.
For its fiscal fourth quarter, ended December 31, 2022, ISPO’s net loss and comprehensive loss increased 66.8% year-on-year to $8.62 million. Its loss per common unit increased 66.8% from the prior year period to $7.39. And its adjusted EBITDA was $6.11 million, down 69.9% from the prior year quarter.
Analysts expect ISPO’s EPS to remain negative at least until its 2023 fiscal year.
The stock is down 66.5% in the past five days to close yesterday’s trading session at $14.23.
ISPO has an overall rating of D, which is equivalent to Sell in our proprietary rating system.
ISPO has a growth rating of F and a value and quality rating of D. In the fashion and luxury industry of 66 stocks, it is ranked No. 64.
In addition to the POWR ratings we listed above, you can see the ISPO ratings for Momentum, Stability, and Sentiment here.
H shares were trading at $90.81 per share on Friday afternoon, down $0.05 (-0.06%). Year-to-date, H is down -5.31%, compared to a -11.19% rise in the benchmark S&P 500 over the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. Continued…