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Interstate Hotels & Resorts (IHR): Shares consolidating in bullish 'flag'

Posted Mar 19th 2008 12:08PM by Larry SchuttsLarry Schutts RSS Feed
Filed under: Earnings reports, Starwood Hotels Worldwide (HOT), Marriott Intl'A' (MAR), Technical Analysis, Blackstone Group L.P (BX), Stocks to Buy

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Interstate Hotels & Resorts (NYSE: IHR) is an independent hotelier, operating a portfolio of 220 hospitality properties in the US, Canada, Mexico and Europe. Altogether, it has approximately 46,000 rooms under management. The firm owns seven of the properties it operates and has ownership interests in 47 more. It has contracts to manage 16 additional facilities, currently in the planning stage. Interstate manages hotels represented by more than 30 franchise and brand affiliations. Marriott International (NYSE: MAR) is a major competitor. Starwood Hotels & Resorts Worldwide (NYSE: HOT) and the Blackstone Group (NYSE: BX) are clients.

The firm pleased investors late last month, when it reported Q4 EPS of 33 cents and revenues of $213.9 million. Analysts had been looking for 24 cents and $205 million. Management also guided FY08 EPS to 30-38 cents, versus Street consensus of 24 cents.

The stock popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy", one "buy" and one "underperform". Analysts see a 22% growth rate, through the next year. The IHR Price to Sales ratio (0.19), Price to Cash Flow ratio (7.63) and EPS Growth rate (17.86%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 68% of the outstanding shares. Over the past 52 weeks, the stock has traded between $3.27 and $6.42. A stop-loss of $4.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Last updated: November 11, 2009: 10:15 AM

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