Since July 2025, Hilton Grand Vacations has been in a holding pattern, posting a small loss of 0.9% while floating around $47.43. The stock also fell short of the S&P 500’s 11.5% gain during that period.
Is there a buying opportunity in Hilton Grand Vacations, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Hilton Grand Vacations Will Underperform?
We're sitting this one out for now. Here are three reasons why HGV doesn't excite us and a stock we'd rather own.
1. Weak Growth in Members Points to Soft Demand
Revenue growth can be broken down into changes in price and volume (for companies like Hilton Grand Vacations, our preferred volume metric is members). While both are important, the latter is the most critical to analyze because prices have a ceiling.
Hilton Grand Vacations’s members came in at 721,488 in the latest quarter, and over the last two years, averaged 19.2% year-on-year growth. This performance was underwhelming and suggests it might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability.
2. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Hilton Grand Vacations’s ROIC averaged 2.5 percentage point decreases over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
3. High Debt Levels Increase Risk
Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.
Hilton Grand Vacations’s $9.66 billion of debt exceeds the $215 million of cash on its balance sheet. Furthermore, its 11× net-debt-to-EBITDA ratio (based on its EBITDA of $898 million over the last 12 months) shows the company is overleveraged.
At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Hilton Grand Vacations could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.
We hope Hilton Grand Vacations can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.
Final Judgment
Hilton Grand Vacations falls short of our quality standards. With its shares underperforming the market lately, the stock trades at 11.5× forward P/E (or $47.43 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are better stocks to buy right now. We’d recommend looking at the most dominant software business in the world.
Stocks We Would Buy Instead of Hilton Grand Vacations
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