Hilton Worldwide Holdings Inc (HLT)

Conclusion

Hilton Worldwide Holdings is a hospitality company that manages, franchises and leases hotels and resorts under a broad portfolio of brands, from luxury to focused-service hotels and timeshare. It is headquartered in McLean, Virginia. On 9 November 2026 the share price was 373.23 USD, giving a market capitalisation of 83.0 billion USD.

The verdict is overvalued. Today's multiples sit above their own ten-year medians: price to earnings is 48.9 against a median of 43.6, a premium of 12.1%, and enterprise value to EBITDA is 30.2 against 23.7, a premium of 27.2%. The discounted cash flow gives 198.44 USD per share. The fair value band runs from 200.78 to 301.16 USD with a midpoint of 250.97 USD, a margin of safety of -32.8% at the current price. The fair value from historical multiples is 303.50 USD. The reverse discounted cash flow implies revenue growth of 20.2% a year, against 22.8% actually delivered over five years, while free cash flow per share grew 29.9% a year over the same period.

What holds the case up is the return on capital: return on invested capital is 32.5% against a weighted cost of capital of 9.3%, and free cash flow runs at 113.5% of earnings over the last twelve months. The share count has fallen by 3.1% a year over five years. What could break it is leverage and liquidity: net debt is 4.14 times EBITDA and the current ratio is 0.59. The price already assumes growth close to what the company has delivered, so there is little room for a slowdown.

Financial health

Financial strength is red, held back by leverage and liquidity; the Altman Z-score is the one good signal. Net debt to EBITDA of 4.14x and a current ratio of 0.59 are both assessed as bad. The quick ratio is 0.49, interest coverage is 4.39 times, and debt to equity is not available. The company reports negative shareholder equity, so the balance sheet offers little cushion. The Altman Z-score is 3.31, in the safe zone, although that model was designed for manufacturers and Hilton is not one. Insolvency risk is medium, about 11.8% by the estimate of the Ohlson model over one to two years, based on figures as of 31 December 2025.

Earnings quality

Earnings quality is green. Free cash flow conversion is 113.5% over the last twelve months and 121.9% over five years, and the accrual ratio is -4.0%, which means cash generation is ahead of reported profit. Stock-based compensation is 1.6% of revenue and free cash flow after it is 1.73 billion USD. The share count fell 3.1% a year over five years, so buybacks have more than offset dilution. The Piotroski score is 6 out of 9. The Beneish M-score is not available. Hilton beat earnings estimates in 7 of the last 8 quarters, with an average surprise of 3.9%. Current-year estimates have been revised up by 1.0% over 90 days, with 9 upgrades and 3 downgrades in the last 30 days. Next-year estimates moved 0.2% over 90 days, with 6 upgrades and 7 downgrades.

Profitability

Profitability is green. The gross margin is 44.6% against a ten-year median of 28.0%, the operating margin is 24.0% against 19.4%, and the net margin is 13.4% against 10.2%. Margin stability is 0.59. Return on invested capital is 32.5% against a weighted cost of capital of 9.3%, and the reported return on invested capital minus cost of capital value is 23.2%. Over five years the median return on invested capital was 21.8%. The DuPont split shows a net margin of 12.1% and an asset turnover of 0.72 as of 31 December 2025. Return on equity is not available, and with negative shareholder equity it would say little anyway.

Growth

Growth is green. Revenue compounded at 11.1% a year over three years, 22.8% over five years and 0.7% over ten years. Revenue grew in 7 of the last 10 years. Earnings per share compounded at 10.6% a year over three years and 3.7% over ten years. Free cash flow per share compounded at 12.7% over three years, 29.9% over five years and 10.6% over ten years. The five-year rates are well above the ten-year ones, so recent growth has been much stronger than the long-run record. Analysts expect earnings per share to grow 14.6% next year.

Valuation

Valuation is red: the verdict is overvalued, with a margin of safety of -32.8%. Current multiples are above their ten-year medians: price to earnings 48.9 against 43.6 (premium 12.1%), enterprise value to EBITDA 30.2 against 23.7 (27.2%), price to free cash flow 43.0 against 33.7 (27.8%) and price to sales 6.5 against 5.5 (18.5%). Price to book has only three historical data points, so no median is available. The discounted cash flow uses a discount rate of 10.2% and gives 198.44 USD per share. The fair value band from 200.78 to 301.16 USD is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium and capped growth. It is not a price target. The dividend yield is 0.17% and the payout on free cash flow is 7.2%.

Risks

The main risk is leverage: at 4.14 times net debt to EBITDA and an interest coverage of 4.39 times, a fall in earnings would quickly tighten the margin for debt service. A current ratio of 0.59 means short-term obligations exceed liquid assets, so the company depends on continued cash generation and access to funding. The medium insolvency estimate of about 11.8% would rise if earnings or cash flow weakened. The valuation risk is that the price already reflects growth close to the 20.2% a year implied by the reverse discounted cash flow, and the company's cash flow shows no margin for disappointment. Data not available include debt to equity, the Beneish M-score, return on equity and price to book. This analysis has no debt maturity schedule and no revenue by segment, so it cannot judge refinancing timing or which business drives growth.