For Immediate Release
Chicago, IL – April 7, 2022 – Zacks Equity Research shares Xenia Hotels & Resorts XHR as the Bull of the Day and Lands’ End, Inc. LE asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on JetBlue Airways JBLU, Spirit Airlines SAVE, and Frontier Group Holdings ULCC.
Here is a synopsis of all five stocks:
Bull of the Day:
Xenia Hotels & Resorts finds itself in the right industry in 2022: travel. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the triple digits this year.
Xenia owns 34 properties with 9,814 rooms in 14 states. Xenia’s hotels are in the luxury and upper upscale market segments, and operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton, Fairmont, Loews, Hilton, The Kessler Collection, and Davidson.
Another Big Beat in Q4 2021
On Mar 1, 2022, Xenia reported its fourth quarter 2021 results and beat the Zacks Consensus for the 6th quarter in a row. Earnings were $0.25 versus the Zacks Consensus of $0.17, for a 47% beat.
It has put together a nice string of beats since the pandemic hit in 2020.
As the travel recovery continued, so did the recovery in Xenia’s portfolio. It’s Same-Property portfolio saw a RevPAR of $136.01, a decline of just 17.5% compared to the fourth quarter of 2019, which was pre-pandemic. In Dec, the portfolio only saw an 8% decline compared to Dec 2019.
Hotel locations in the popular sunbelt vacation states helped the portfolio in the quarter.
Additionally, the company gave an update on what it was seeing in the first quarter of 2022.
The Omicron outbreak did hit the January performance, as their current Same-Property portfolio, which was just 32 hotels after the sale of Hotel Monaco Chicago, saw a RevPAR decline of about 37% compared to Jan 2019.
But, preliminary results for Feb showed a “substantial rebound” as the projected RevPAR of about $157 would represent about a 19% decline compared to a very strong Feb 2019.
It would be the highest absolute monthly RevPar since the beginning of the pandemic.
There’s no doubt that Americans were traveling for spring break vacations in March.
Xenia will report first quarter earnings on May 3, 2022 before the market opens.
Analysts Bullish About 2022
The analysts are bullish going into the first quarter earnings report. 1 estimate was revised higher for 2022 in just the last week.
The 2022 Zacks Consensus Estimate has jumped to $1.23 from $1.05 just 90 days ago. That is earnings growth of 339% compared to last year where the company earned just $0.28.
Shares Tread Water: A Buying Opportunity?
The travel stocks were all hot in 2020 after the reopen. Xenia shares jumped 123% over the last 2 years, which beat the S&P 500 which was up just 81%.
However, over the last year, the shares are actually down 1.6% even as the outlook improved.
Xenia shares are cheap, with a forward P/E of 15.4. However, it still isn’t paying any kind of dividend.
Travel is expected to continue to gain momentum this year.
For those looking for an attractively valued travel play, Xenia is one to keep on your short list.
Bear of the Day:
Lands’ End, Inc. is still navigating supply chain issues even as demand for apparel remains strong. This Zacks Rank #5 (Strong Sell) has had its full year earnings estimate cut in the last 30 days.
Lands’ End is a retailer of casual clothing, accessories, footwear and home products for women, men, kids and the home. It operates online at www.landsend.com, on third party marketplaces such as at Kohl’s, and through its own brick and mortar retail locations.
Highest Full Year Sales Since 2011
On Mar 16, Lands’ End reported its fourth quarter and fiscal 2021 full year results and missed on the Zacks Consensus Estimate by $0.12. Earnings were $0.21 versus the Zacks Consensus of $0.33.
Fourth quarter revenue rose 3.2% to $555.4 million from $538.4 million. Global eCommerce net revenue fell 4.4% to $441.5 million from $461.9 million the year before due to shipping delays caused by supply chain challenges. US eCommerce fell 2.2% and International fell 14.6%.
Outfitters, however, increased 43.6% to $61.8 million due to stronger demand within Lands’ End travel-related national accounts and school uniform customers.
The Kohl’s partnership continues to pay off as third party net revenue, which includes the Kohl’s partnership, rose to $36.3 million from $21.3 million a year ago.
The $15 million increase was mostly due to the Kohl’s partnership which expanded to 300 locations during the third quarter of 2021 from 150 retail locations in the fourth quarter of 2020.
Increased shipping costs due to the global supply chain challenges hit gross margins, which fell about 360 basis points to 35.9% from 39.5% a year ago.
For the full year, revenue rose 14.7% year-over-year for the company’s highest revenue since 2011.
Supply Chain Challenges Hit Fiscal 2022
The supply chain challenges that hit in the fourth quarter of 2021 aren’t over. Lands’ End warned that it would take a $15 million hit in the first quarter due to incremental shipping costs.
It also expects year-over-year sales growth to be higher in the back half of the year due to lapping strong demand from the first half of 2021 and inventory constraints it experienced in the back half of 2021.
2022 Earnings Estimates Cut
Analysts have gotten bearish on Lands’ End.
One analyst cut their 2022 earnings estimate in the last month which has pushed the Zacks Consensus down to $0.94 from $1.40 during that time. That’s an earnings decline of 5% as Lands’ End made $0.99 last year.
Shares Sink Over the Last Year
The apparel retailers were hot to start 2021 when sales exceeded expectations on the reopen. But as supply challenges hit, shares have sunk.
Lands’ End shares are down 33.8% over the last year. They saw a rebound off the lows in 2022 but are still down 18.5% year-to-date.
Will they make new lows before they report first quarter results?
Shares aren’t that cheap. They trade with a forward P/E of 17.9.
Retailers are out of favor in 2022 as the supply chain challenges persist and fears about a recession swirl. If you’re interested in the group, you may want to keep them on your watch list and tune into their first quarter reports.
What to Know About JetBlue’s Offer for Spirit
JetBlue Airways has submitted a proposal to acquire Spirit Airlines in a $3.6-billion deal, following which the latter’s shares jumped 22.4% at the close of business on Apr 5. JBLU shares declined 7.1% in yesterday’s trading. The proposal deals a blow to the previously announced merger agreement between Spirit Airlines and Frontier Group Holdings
While JetBlue is also a low-cost carrier, it is not an ultra-low-cost carrier like Spirit Airlines or Frontier Airlines. A possible deal between two companies with different operating structures raises concerns of higher fares. As it is, the Spirit Airlines-Frontier Airlines deal drew flak on the grounds that it could “further concentrate and even monopolise the ultra-low-cost carrier segment of the industry, rather than create a meaningful competitor.”
While JetBlue and Spirit Airlines carry a Zacks Rank #3 (Hold), Frontier carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JetBlue Airways Corporation price | JetBlue Airways Corporation Quote
Frontier criticized JetBlue’s proposal, saying that it would reduce competition and limit travel options for customers. Defending its own proposal, ULCC said, that it “is in the best interest of consumers and shareholders and would deliver $1 billion in annual savings for consumers,” a Reuters report stated.
JetBlue’s $3.6-billion deal, equivalent to $33 per share in cash, represents a premium of 52% to Spirit Airlines’ undisturbed share price on Feb 4, 2022, and a premium of 50% to its closing share price on Apr 4, 2022. JBLU feels the proposal is “superior” to the Spirit Airlines-Frontier Airlines deal as it provides an attractive opportunity for SAVE’s shareholders. JBLU CEO Robin Hayes said, “Customers shouldn’t have to choose between a low fare and a great experience.”
Per JetBlue, combining the two airlines would create the fifth-largest domestic airline, giving tough competition to the big four U.S. carriers. The Spirit Airlines deal is expected to help JetBlue expand its footprint in New York and Florida. The merger will help JBLU expand across the United States, the Caribbean and Latin America. The combined entity would offer more than 1,700 daily flights to over 130 destinations in 27 countries.
The transaction is expected to generate $600-700 million in net annual synergies upon completion of integration. The combined company is predicted to generate annual revenues of approximately $11.9 billion (based on 2019 revenues). Excluding integration costs, the transaction is expected to be accretive to JetBlue’s earnings per share in the first full year.
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
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Xenia Hotels & Resorts, Inc. (XHR) : Free Stock Analysis Report
Frontier Group Holdings, Inc. (ULCC) : Free Stock Analysis Report
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