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US Equities · Finance research note

HLT — Hilton Worldwide

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 57.36%
Profit Margins 30.41%
Return on Assets 10.86%
Free Float 0.22B
Dividend Yield 18.0%
Short Int % Utilisation 2.81%

2.2 Growth

Metric Value
Revenue Growth 11.0%
Free Cash Flow 1.68B
EBITDA 29.81 (Ratio)
Enterprise Value 89.53B
EV/Revenue 17.66
EV/EBITDA 29.81

Revenue growth of 11.0% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 26.27%
Risk / Std Dev (Ann.)* 23.82%
1-Year Price Return* 22.47%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $327.21
52-Week Range $253.54 – $358.00
Observation Count 250 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $12.04B $11.17B
Net income Reported net income $1.46B $1.53B
Total assets Year-end reported balance $16.77B $16.52B
Shareholders’ equity Year-end reported balance $-5.39B $-3.73B
Net margin Net income ÷ revenue 12.10% 13.74%
Asset turnover Revenue ÷ total assets 0.7177x 0.6763x
Equity multiplier Total assets ÷ shareholders’ equity -3.1132x -4.4331x
ROE Net margin × asset turnover × equity multiplier -27.04% -41.19%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $12.04B
Prior annual revenue $11.17B
EBIT $2.69B
Tax rate 29.50%
NOPAT = EBIT × (1 − tax rate) $1.90B
Forecast start-growth basis 7.74%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $1.90B
Add: depreciation & amortisation $177.00M
Less: capital expenditure -$185.00M
Less/(add): working-capital cash-flow movement $525.00M
Current unlevered FCFF $2.41B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 7.74% $2.04B $190.70M -$199.32M $565.64M $2.60B $2.49B
2 6.43% $2.18B $202.97M -$209.85M $602.02M $2.77B $2.42B
3 5.12% $2.29B $213.36M -$218.18M $632.84M $2.92B $2.32B
4 3.81% $2.37B $221.49M -$223.99M $656.96M $3.03B $2.20B
5 2.50% $2.43B $227.03M -$227.03M $673.38M $3.11B $2.07B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.06
Cost of equity 10.56%
Pre-tax cost of debt 4.96%
WACC 9.50%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $45.51B
Implied terminal EV / EBITDA 12.37x
Terminal value as % of enterprise value 71.54%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $11.50B
Present value of terminal value $28.91B
Indicated enterprise value $40.41B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $40.41B
Less: gross interest-bearing debt $13.09B
Add: cash and equivalents $918.00M
Add: affiliate investments $0.00
Less: minority interests $42.00M
Indicated common equity value $28.19B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 238,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $329.62
DCF indicative value per share $118.45
Indicative value vs. market price -64.07%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 2/4 evidenced checks
Lynch-inspired balance-and-growth checks 3/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:36:31.934154 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 0.38% 17.40%
Adjusted R² 0.23 0.32
Annualised residual volatility 20.30% 19.10%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.71 (5.96) 1.04 (8.06)
Size (SMB) 0.50 (3.08) 0.53 (3.25)
Value (HML) 0.37 (2.68) 0.07 (0.41)
Profitability (RMW) NM 0.60 (4.41)
Investment (CMA) NM 0.43 (1.83)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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