Wyndham Worldwide Corporation is scheduled to report first-quarter 2017 numbers on Apr 26, before market opens.

Last quarter, the company posted a positive earnings surprise of 3.85%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with average beat of 2.19%.

Wyndham Worldwide Corp Price and EPS Surprise

Let’s see how things are shaping up for this announcement.

Factors at Play

Lingering uncertainty in various economies like Europe, Brazil and China is likely to limit revenue growth. Also, soft demand in oil producing regions is likely to hurt revenue per available room (RevPAR) in the fourth quarter. Moreover, given Wyndham’s considerable international operations, negative currency translation might continue hampering the company’s results, as it has been doing over the past few quarters.

Nevertheless, Wyndham’s strong developmental pipeline, prudent acquisitions and robust marketing efforts are expected to drive earnings in the to-be-reported quarter. In fact, Wyndham recently acquired Latin America's leading Fen Hotels while the company’s Vacation Rentals entered into a strategic partnership with Unique Ventures (Veeve). Both these deals are expected to expected boost sales considerably as they add to the company’s international exposure.

Meanwhile, increasing business and leisure travel on the back of an improving economy and positive employment numbers along with higher transaction volumes should also boost the quarter’s results. Further, the company’s robust vacation ownership or timeshare business is one of the fastest evolving and profitable sectors in the hospitality industry and is likely to further propel first-quarter performance. Moreover, Wyndham’s attractive Loyalty and Rewards Program along with other strategic initiatives undertaken are expected to increase occupancy.

However, though the new owner strategy is expected to benefit Wyndham’s timeshare business in the long run, it is expected to weigh on the company’s revenues and EBITDA in the near-term.

Earnings Whispers

Our proven model does not conclusively show that Wyndham is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Wyndham’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.11. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Wyndham currently has a Zacks Rank #4 (Sell).

As it is we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some hotel companies that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Hilton Worldwide Holdings Inc. (HLT Quick QuoteHLT - Free Report) has an Earnings ESP of +10.71% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

La Quinta Holdings Inc. has an Earnings ESP of +50.00% and a Zacks Rank #3.

Red Lion Hotels Corporation has an Earnings ESP of +3.33% and a Zacks Rank #3.

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