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InterContinental Hotels (first half earnings 8 August)
First quarter (Q1) was strong for InterContinental Hotels Group (IHG), with revenue per room up 2.7%. The firm remains confident in the outlook for the full year, with a continuing commitment to maintaining the integrity of the balance sheet. JPMorgan has noted that the US division’s earnings are 5% above the 2008 peak, while in Europe the firm is still 17% below its peak. IHG has put much effort into franchise development in the US and China, but these have yet to bear meaningful fruit. A projected forward operating margin of 42.2% puts IHG ahead of the seven-year average of 36.6%, and far above its peers’ average of 18.9%. At 22 times forward earnings and with a yield of 1.7%, the firm is more expensive and less attractive income wise than peers, which have an average forward price earnings (PE) of 18.3 with a forecast yield average of 4%.
IHG’s chart is one of those trends that is, if nothing else, immensely pleasing to the eye. A record high in June has been followed by another steady pullback. A recovery back above the 50-day simple moving average (SMA) currently at 4338p, would signal a move back towards the all-time high (4490p). The trend has been so strong that a move below 3800p would be the only real sign that IHG’s run is at an end.