Hilton Worldwide Holdings Inc

China's domestic tourism market is weakening faster than expected, clouding one of the few bright spots in the country's sluggish consumer economy. Hilton China now expects revenue per available room to fall by low single digits this year, worse than earlier expectations for a flat performance, after swinging from 1.3% growth in the first quarter to a 2.2% fall in the second quarter. Across China, hotel RevPAR has tumbled 6% year-on-year through late July, following a 1% drop in June, according to Smith Travel Research data cited by Goldman Sachs. A three percentage point drop in occupancy along with a 1% decline in average daily rates versus a year ago dragged down revenue. The travel sub-index of the consumer price index dropped by 0.6% in June from the prior month, with China's chief statistician pointing to sharp price drops in hotel rates and airfares. Inbound travel offers modest support, with overseas visitors accounting for 12% to 13% of total tourism spending, and Hyatt's Greater China RevPAR rose 7.2% year-on-year in the second quarter, driven by leisure luxury.

Hilton Worldwide Holdings raised its full-year profit outlook but shares fell 3.4% after third-quarter guidance came in below Wall Street estimates. The hotel operator now expects full-year adjusted earnings per share of $8.89 to $9.01, up from $8.79 to $8.91 previously, with full-year adjusted EBITDA projected at $4.04 billion to $4.08 billion, above the prior range of $4.02 billion to $4.06 billion. However, third-quarter adjusted earnings are forecast at $2.28 to $2.34 per share, below the $2.42 analysts had projected, and adjusted EBITDA is guided to $1.035 billion to $1.055 billion versus estimates of $1.08 billion. Management said third-quarter RevPAR growth of about 4% is expected on a constant currency basis, aided by the World Cup, while the fourth quarter faces a headwind from the US midterm elections. Hilton's development pipeline grew 6% year-over-year to 541,300 rooms, and the company opened 207 hotels during the quarter, adding 21,600 rooms net.

Coca-Cola and Sherwin-Williams were among the biggest premarket movers after both companies reported quarterly results that exceeded expectations and raised their full-year outlooks. Coca-Cola shares rose 2% after posting adjusted earnings of 97 cents per share on revenue of $13.38 billion, topping analyst estimates. Sherwin-Williams climbed nearly 6% with adjusted earnings of $3.70 per share on $6.79 billion in revenue, also beating forecasts and lifting its full-year earnings guidance. Johnson & Johnson gained more than 2% after agreeing to pay $5.5 billion to settle talc-related ovarian cancer lawsuits. Hilton Worldwide fell 2.7% after issuing third-quarter earnings guidance below consensus, while Universal Health Services dropped 3% on a lowered full-year outlook. Welltower advanced 4.5% after raising its full-year normalized funds from operations forecast above estimates, and Happen, formerly LendingClub, surged more than 6% on stronger-than-expected full-year earnings guidance.

StockStory identifies Berkshire Hathaway as an S&P 500 stock with competitive advantages, while recommending investors avoid Hilton and D.R. Horton. Berkshire Hathaway, with a market cap of $1.05 trillion, posted 18.9% annual earnings per share growth over the past two years and a 15.9% annual tangible book value per share increase over five years, alongside a 13.2% return on equity. Hilton, valued at $77.82 billion, faces weak revenue per room and an operating margin of 22.1% below the industry average, with its free cash flow margin expected to contract by 2.4 percentage points. D.R. Horton, at a $43.79 billion market cap, saw a 7.6% average backlog decline over two years and a 14.8% annual drop in earnings per share, with eroding returns on capital.