Analysts say Hilton, lodged in the bargain basement, is good buy.

Analysts say Hilton, lodged in the bargain basement, is good buy

The stock hit $115 last year; now insiders joke about `three-day highs' around $49

Despite hitting a 52-week low of $46.50 per share on April 30, Hilton Hotels Corp. is still a solid company, according to securities analysts. In fact, they said, now is a good time for long-term investors to buy Hilton stock.

There was little concern about the new low within the company, either. William Lebo, senior vice president of Hilton, joked that his company's stock has hit a `three day high" of $49.50. Lebo referred to Hilton's powerful first-quarter performance as an omen of better stock prices to come.

Hilton nearly doubled its first quarter earnings this year, pulling in a net income of $25.1 million or 52 cents per share for the period ended March 31. During first quarter 1989 Hilton earned $13.1 million, or 27 cents per share.

David Jackson, an analyst with Western Group in Los Angeles, said he put a buy recommendation on Hilton stock when it bottomed out.

"It just eroded too low for the value of the company," he explained.

Jackson said Hilton's robust start this year should gain added strength from construction of a new tower at the Flamingo Hilton in Las Vegas and the planned fall opening of its new casino hotel in Laughlin, Nev. along the Colorado River.

The new Flamingo tower has added 733 rooms to the development. The new Laughlin resort is a $187 million, 2,000-room project in a town that Jackson says has enjoyed five consecutive years of explosive growth and replaced Lake Tahoe as Nevada's third-largest gambling market.

James Schmitt, a securities analyst with Westcounty Financial in Ventura County, said after completing major capital improvements like the Flamingo tower and Laughlin resort, Hilton should start experiencing a higher net cash flow. (Hilton also completed a $1.4 billion renovation program of its best hotel properties.)

Schmitt attributed the company's dropping stock prices to the continuing exodus of investors who bought shares when Hilton was for sale in hopes of making a fast profit. When the Beverly Hills-based company announced last year that it was looking for a buyer, stock prices skyrocketed and peaked at about $115 per share in August. But when Hilton was pulled off the market on March 7, the stock went south.

Schmitt speculated that the last of the buyout opportunists may still be unloading their Hilton shares and depressing their price to bargain levels.

"I look at it as sort of a second chance to invest in the company," Schmitt commented.

Jackson predicted that Hilton shares will earn $3 each this year, and $3.60 in 1991. Schmitt said he is still calculating his official earnings-per-share forecast, but tentatively pointed to $2.75 for 1990 and $3.10 in 1991.

In recent trading activity, Hilton Vice President Allen Hermansen exercised an option to buy 1,800 shares of common stock at $14.16 per share on April 16, and now directly holds 12,800 shares.

Francis Dubeau, another Hilton vice president, exercised his option on 600 shares of $14.16 per share of common stock on April 6. Dubeau now directly and indirectly hold 9,340 shares.