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Choice Hotels (CHH) Up 7.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Choice Hotels (CHH - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Choice Hotels due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Choice Hotels Q3 Earnings Top Estimates, Revenues Lag
Choice Hotels delivered mixed third-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, both metrics increased on a year-over-year basis.
The quarter’s performance was backed by the effective execution of its growth strategy. The company accelerated unit growth and expanded its global pipeline. CHH also increased its international presence and significantly grew the size of the company’s rewards program.
Owing to this solid performance, Choice Hotels raised its adjusted net income, adjusted earnings per share (EPS) and revenue per available room (RevPAR) guidance for 2024. Moreover, the company's versatile business model and accretive growth strategies ensure the support required to foster its growth trends.
Going forward, CHH believes that it is well-positioned to deliver bottom-line growth as well as maintain shareholder value on the back of the aforementioned business strategies against the improving demand backdrop.
CHH’s Q3 Earnings and Revenues
Choice Hotels reported adjusted EPS of $2.23, which beat the Zacks Consensus Estimate of $1.91 by 16.8%. It reported adjusted EPS of $1.82 in the prior-year quarter.
Quarterly revenues of $428 million missed the consensus mark of $436.4 million by 1.9%. On the other hand, the metric grew 1% from the year-ago level of $425.6 million.
Franchising & Royalties of CHH
Royalty, licensing and management fees decreased 1% year over year to $147.2 million. During the three months ended Sept. 30, domestic RevPAR declined 250 basis points (bps) year over year.
System-wide effective royalty rate increased 6 bps year over year to 5.05%.
Operating Results of CHH
Total operating expenses declined 5% year over year to $276.2 million. Our estimate for the metric was $290.9 million.
Adjusted EBITDA was $177.6 million, up 14% year over year. We expected the metric to be $174.9 million.
CHH’s Balance Sheet
As of Sept. 30, 2024, Choice Hotels had cash and cash equivalents of $58.6 million compared with $26.8 million as of Dec. 31, 2023.
Long-term debt at the end of the third quarter was $1.81 billion compared with $1.07 billion reported in 2023-end.
CHH’s 2024 Outlook Updated
Choice Hotels now anticipates adjusted net income to be in the range of $323-$331 million, up from the prior estimate of $309.5-$321 million. Adjusted EBITDA is expected to be between $590 million and $600 million compared with the prior estimate of $580-$600 million.
Adjusted EPS is now expected to be in the range of $6.70-$6.87, up from the prior projection of $6.40-$6.65.
Domestic RevPAR year-over-year growth is now estimated to be in the range of -2% to -1% compared with the prior expected range of -3.5% to -1.5%. The domestic effective royalty rate is still predicted to increase in mid-single digits from the year-earlier level.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 10.98% due to these changes.
VGM Scores
At this time, Choice Hotels has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Choice Hotels has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Choice Hotels is part of the Zacks Hotels and Motels industry. Over the past month, Hilton Worldwide Holdings Inc. (HLT - Free Report) , a stock from the same industry, has gained 6.5%. The company reported its results for the quarter ended September 2024 more than a month ago.
Hilton Worldwide reported revenues of $2.87 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $1.92 for the same period compares with $1.67 a year ago.
Hilton Worldwide is expected to post earnings of $1.67 per share for the current quarter, representing a year-over-year change of -0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
Hilton Worldwide has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Choice Hotels (CHH) Up 7.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Choice Hotels (CHH - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Choice Hotels due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Choice Hotels Q3 Earnings Top Estimates, Revenues Lag
Choice Hotels delivered mixed third-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, both metrics increased on a year-over-year basis.
The quarter’s performance was backed by the effective execution of its growth strategy. The company accelerated unit growth and expanded its global pipeline. CHH also increased its international presence and significantly grew the size of the company’s rewards program.
Owing to this solid performance, Choice Hotels raised its adjusted net income, adjusted earnings per share (EPS) and revenue per available room (RevPAR) guidance for 2024. Moreover, the company's versatile business model and accretive growth strategies ensure the support required to foster its growth trends.
Going forward, CHH believes that it is well-positioned to deliver bottom-line growth as well as maintain shareholder value on the back of the aforementioned business strategies against the improving demand backdrop.
CHH’s Q3 Earnings and Revenues
Choice Hotels reported adjusted EPS of $2.23, which beat the Zacks Consensus Estimate of $1.91 by 16.8%. It reported adjusted EPS of $1.82 in the prior-year quarter.
Quarterly revenues of $428 million missed the consensus mark of $436.4 million by 1.9%. On the other hand, the metric grew 1% from the year-ago level of $425.6 million.
Franchising & Royalties of CHH
Royalty, licensing and management fees decreased 1% year over year to $147.2 million. During the three months ended Sept. 30, domestic RevPAR declined 250 basis points (bps) year over year.
System-wide effective royalty rate increased 6 bps year over year to 5.05%.
Operating Results of CHH
Total operating expenses declined 5% year over year to $276.2 million. Our estimate for the metric was $290.9 million.
Adjusted EBITDA was $177.6 million, up 14% year over year. We expected the metric to be $174.9 million.
CHH’s Balance Sheet
As of Sept. 30, 2024, Choice Hotels had cash and cash equivalents of $58.6 million compared with $26.8 million as of Dec. 31, 2023.
Long-term debt at the end of the third quarter was $1.81 billion compared with $1.07 billion reported in 2023-end.
CHH’s 2024 Outlook Updated
Choice Hotels now anticipates adjusted net income to be in the range of $323-$331 million, up from the prior estimate of $309.5-$321 million. Adjusted EBITDA is expected to be between $590 million and $600 million compared with the prior estimate of $580-$600 million.
Adjusted EPS is now expected to be in the range of $6.70-$6.87, up from the prior projection of $6.40-$6.65.
Domestic RevPAR year-over-year growth is now estimated to be in the range of -2% to -1% compared with the prior expected range of -3.5% to -1.5%. The domestic effective royalty rate is still predicted to increase in mid-single digits from the year-earlier level.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 10.98% due to these changes.
VGM Scores
At this time, Choice Hotels has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Choice Hotels has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Choice Hotels is part of the Zacks Hotels and Motels industry. Over the past month, Hilton Worldwide Holdings Inc. (HLT - Free Report) , a stock from the same industry, has gained 6.5%. The company reported its results for the quarter ended September 2024 more than a month ago.
Hilton Worldwide reported revenues of $2.87 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $1.92 for the same period compares with $1.67 a year ago.
Hilton Worldwide is expected to post earnings of $1.67 per share for the current quarter, representing a year-over-year change of -0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
Hilton Worldwide has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.