Hilton Grand Vacations Inc. (HGV) stock intrinsic value fair value estimate & owner earnings analysis

Hilton Grand Vacations sells and finances vacation ownership interests (timeshares) under the Hilton Grand Vacations brand and, since the 2021 Diamond acquisition and the January 17, 2024 Bluegreen Vacations acquisition, under those brands as well. It also earns recurring fees from managing resorts and clubs. In 2025 the real estate sales and financing segment produced $2,989 million of revenue (timeshare sales of $1,812 million and $473 million of interest income on customer loans) and the resort operations and club management segment produced $1,625 million. The Hilton license runs through December 31, 2116, so the brand right is not a near-term concern. How we measured earnings. We start from operating cash flow, remove the swings in working capital, then subtract stock compensation and the capital spending needed to keep the business running. Two judgements matter. First, we treat the provision for customer loan losses ($442 million in 2025, up from $171 million in 2023) as a real, recurring cost rather than a non-cash add-back, and we neither charge nor credit growth in the loan book, which is largely funded by non-recourse borrowing. Second, we remove the $385 million increase in deferred revenue in 2025, which is mainly cash collected on timeshares in projects still under construction (the deferred revenue balance rose from $252 million to $637 million). That cash is timing and reverses when the projects are completed. On this basis owner earnings per share were $1.92 (2016), $1.88 (2017), $3.15 (2018), $2.44 (2019), -$1.04 (2020), $3.64 (2021), $4.35 (2022), $4.21 (2023), $2.59 (2024) and $2.73 (2025). In total dollars, owner earnings were about $267 million in 2024 and $250 million in 2025. Per-share growth of 5.4% in 2025 therefore came from buybacks, while total owner earnings fell 6.5%. Which years we used. The company was transformed by Diamond in 2021 and again by Bluegreen in January 2024. We use only 2024 and 2025, the two full years of the business as it now exists, giving an anchor of about $2.66 per share. Earlier years describe smaller businesses. We do not credit share buybacks as value creation ($600 million was spent in 2025, and diluted shares fell from 92.2 million to 80.9 million between the second quarters of 2025 and 2026). Intangibles. Amortization of acquired intangibles was $216 million in 2025 and is scheduled at $215 million in 2026, $186 million in 2027, $154 million in 2028, $122 million in 2029 and $111 million in 2030. Because this cost is added back, we carry the decay in the outlook instead: after year 10 the base case fades toward the level the smaller pre-acquisition business demonstrated (owner earnings of roughly $187 million to $309 million a year in 2016 to 2019, a median of about $204 million, versus about $258 million now) rather than continuing at today's level indefinitely. Base case ($39.5 per share). Owner earnings stay at $2.66 per share for ten years, then decline evenly over the following ten years to 75% of that level ($2.00) and stay there. Owner earnings per share grew 5.4% in 2025; we assume 0% growth in year 1 because nothing contracted or already under way adds earnings, so no growth is credited. What supports continuing earnings is the Hilton license to 2116, the recurring fees from resort and club management ($1,625 million of revenue, up 6.3% in 2025), and a timeshare sales business that produced positive owner earnings in nine of the last ten years. We left out synergies from the Bluegreen and Diamond deals, market growth and margin gains because the filing gives no evidence we could rely on. Bear case ($21.0 per share). A demand collapse like 2020 occurs in year 1 (revenue fell from $1,838 million to $894 million that year, and owner earnings were -$1.04 per share). Earnings recover to $1.30 in year 2 and then stay at $1.60 per share, about 60% of the base level. That is below what the smaller pre-acquisition business earned in 2016 and 2017 (about $1.90 per share). It reflects loan-loss provisions that reached 8.8% of revenue in 2025 (4.3% in 2023) and higher borrowing costs when low-coupon debt (the 5.000% notes due 2029, $850 million, and the 4.875% notes due 2031, $500 million) is refinanced. The company has $4.6 billion of corporate debt plus $2.7 billion of non-recourse debt, so a weak year matters more than it would for a company with little debt. After year 10 earnings fade to 75% of the bear level. Bull case ($61.6 per share). Owner earnings recover to $2.90 in year 1 and $3.50 in year 2, then return to $4.28 per share, the average of 2022 and 2023 when the company actually earned $4.35 and $4.21. After year 10 they fade to 75% of that level. The evidence is the record of those two years, not a forecast of new growth. Recent results. In the first half of 2026 revenue was $2,643 million, up 9.5% from $2,414 million in the first half of 2025, and operating cash flow was $262 million versus $99 million. That is one half-year and includes working-capital timing, so it does not change our level. What would make this wrong. A prolonged fall in timeshare sales or a sharp rise in customer defaults would push results toward the bear case. The filing also discloses a July 22, 2024 adverse interim arbitration award involving a Bluegreen subsidiary; we did not size its cash impact. Our 2018 owner earnings differ from the cash-flow statement components by about $3 million, a small difference we could not trace. Margin-of-safety price. Given heavy debt, sensitivity to consumer demand, and a wide gap between the bear and bull values, the margin-of-safety price is about $21.50, close to the bear-case value.