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Choice Hotels International, Inc. (CHH - Free Report) reported third-quarter 2022 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. The top and bottom lines increased on a year-over-year basis. Earnings lagged the Zacks Consensus Estimate for the second straight quarter.
Patrick Pacious, president and CEO of Choice Hotels, stated, “We exceeded our 2019 earnings last year, have built on that strength through the third quarter this year and are confident that the changes we are observing in leisure and business travel behavior that favor our brands will enable us to maximize growth opportunities well into the future.”
Q3 Earnings and Revenues
Choice Hotels reported adjusted earnings of $1.56 per share, which missed the consensus mark of $1.75 by 10.9%. The bottom line increased 3.3% from the prior-year quarter’s figure of $1.51.
In the quarter under review, total revenues came in at $414.3 million, which surpassed the consensus mark of $380 million by 8.9%. Moreover, the metric rose 28% from the year-ago quarter’s level.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
During the third quarter, domestic royalty fees totaled $144 million, up 13% compared with the same period in 2021. Domestic revenues per available room (RevPAR) increased 15.2% from third-quarter 2019. The uptick was driven by a 15.1% increase in the average daily rate.
In the third quarter, domestic franchise agreements awarded increased by 38%. The company's extended-stay portfolio continues to expand its footprint. As of Sep 30, 2022, the number of domestic pipelines increased 16% to 1,017 hotels.
Operating Results
Total operating expenses during third-quarter 2022 increased 72% year over year to $282.6 million. Adjusted EBITDA rose 4.6% from the prior-year quarter’s figure to $139.4 million.
Balance Sheet
As of Sep 30, 2022, Choice Hotels had cash and cash equivalents of $52.5 million compared with $511.6 million as of Dec 31, 2021.
Long-term debt at the end of the third quarter was $1,155.1 million compared with $844.1 million reported in fourth-quarter 2021 end. Goodwill, as a percentage of total assets, came in at 10.4% compared with 8.1% in first-quarter 2022 end.
2022 Outlook
In 2022, the company expects adjusted EBITDA in the range of $465-$470 million (including a $14-$15 million adjusted EBITDA contribution from the Radisson Hotels Americas business unit), representing 15-17% growth compared with 2021.
Excluding the impact of Radisson Hotels Americas, domestic RevPAR is likely to grow in the range of 13-15% compared with 2019 and 11-12% compared with 2021.
In 2022, the company’s domestic effective royalty rate (excluding the impact of Radisson Hotels Americas) for full-year 2022 is anticipated to increase in the mid single digit.
Other Updates
The domestic extended-stay pipeline reached 468 hotels as of Sep 30, 2022. At the end of third-quarter 2022, the number of domestic hotels and rooms increased 5.4% and 5.5%, respectively, from September 30, 2021.
Marriott currently carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has declined 10% in the past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates a surge of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 55% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.6% and 20.7%, respectively, from the year-ago period’s levels.
Caesars Entertainment carries a Zacks Rank #2. The stock has declined 57.2% in the past year.
The Zacks Consensus Estimate for CZR’s current financial year sales and EPS indicates growth of 14.1% and 25.9%, respectively, from the year-ago period’s reported levels.
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Choice Hotels (CHH) Q3 Earnings Miss, Revenues Beat Estimates
Choice Hotels International, Inc. (CHH - Free Report) reported third-quarter 2022 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. The top and bottom lines increased on a year-over-year basis. Earnings lagged the Zacks Consensus Estimate for the second straight quarter.
Patrick Pacious, president and CEO of Choice Hotels, stated, “We exceeded our 2019 earnings last year, have built on that strength through the third quarter this year and are confident that the changes we are observing in leisure and business travel behavior that favor our brands will enable us to maximize growth opportunities well into the future.”
Q3 Earnings and Revenues
Choice Hotels reported adjusted earnings of $1.56 per share, which missed the consensus mark of $1.75 by 10.9%. The bottom line increased 3.3% from the prior-year quarter’s figure of $1.51.
In the quarter under review, total revenues came in at $414.3 million, which surpassed the consensus mark of $380 million by 8.9%. Moreover, the metric rose 28% from the year-ago quarter’s level.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Choice Hotels International, Inc. price-consensus-eps-surprise-chart | Choice Hotels International, Inc. Quote
Franchising & Royalties
During the third quarter, domestic royalty fees totaled $144 million, up 13% compared with the same period in 2021. Domestic revenues per available room (RevPAR) increased 15.2% from third-quarter 2019. The uptick was driven by a 15.1% increase in the average daily rate.
In the third quarter, domestic franchise agreements awarded increased by 38%. The company's extended-stay portfolio continues to expand its footprint. As of Sep 30, 2022, the number of domestic pipelines increased 16% to 1,017 hotels.
Operating Results
Total operating expenses during third-quarter 2022 increased 72% year over year to $282.6 million. Adjusted EBITDA rose 4.6% from the prior-year quarter’s figure to $139.4 million.
Balance Sheet
As of Sep 30, 2022, Choice Hotels had cash and cash equivalents of $52.5 million compared with $511.6 million as of Dec 31, 2021.
Long-term debt at the end of the third quarter was $1,155.1 million compared with $844.1 million reported in fourth-quarter 2021 end. Goodwill, as a percentage of total assets, came in at 10.4% compared with 8.1% in first-quarter 2022 end.
2022 Outlook
In 2022, the company expects adjusted EBITDA in the range of $465-$470 million (including a $14-$15 million adjusted EBITDA contribution from the Radisson Hotels Americas business unit), representing 15-17% growth compared with 2021.
Excluding the impact of Radisson Hotels Americas, domestic RevPAR is likely to grow in the range of 13-15% compared with 2019 and 11-12% compared with 2021.
In 2022, the company’s domestic effective royalty rate (excluding the impact of Radisson Hotels Americas) for full-year 2022 is anticipated to increase in the mid single digit.
Other Updates
The domestic extended-stay pipeline reached 468 hotels as of Sep 30, 2022. At the end of third-quarter 2022, the number of domestic hotels and rooms increased 5.4% and 5.5%, respectively, from September 30, 2021.
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Marriott International, Inc. (MAR - Free Report) , Crocs, Inc. (CROX - Free Report) and Caesars Entertainment, Inc. (CZR - Free Report) .
Marriott currently carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has declined 10% in the past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates a surge of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 55% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.6% and 20.7%, respectively, from the year-ago period’s levels.
Caesars Entertainment carries a Zacks Rank #2. The stock has declined 57.2% in the past year.
The Zacks Consensus Estimate for CZR’s current financial year sales and EPS indicates growth of 14.1% and 25.9%, respectively, from the year-ago period’s reported levels.