Back to top

Analyst Blog

Leading hospitality company, Wyndham Worldwide Corporation’s (WYN - Analyst Report), first-quarter adjusted earnings of 78 cents per share beat the Zacks Consensus Estimate of 75 cents by 4.0% which, we believe, was due to better-than-expected revenues.

Further, quarterly earnings were up 9.9% year over year led by strong performance by the company’s Lodging as well as Vacation Ownership businesses and share repurchase activities.

Net revenue grew 5.6% year over year to $1.21 billion in the quarter, beating the Zacks Consensus Estimate of $1.19 billion by 1.7%. Solid revenue growth in all the three operating segments aided quarterly sales.

Inside the Headline Numbers

Wyndham has three operating segments — Lodging, Vacation Exchange and Rentals and Vacation Ownership. All the segments have both domestic and international operations.

Wyndham’s Lodging segment revenues grew 6.8% year over year to $237.0 million in the quarter, driven by a 7.6% rise in domestic revenue per available room (RevPAR), higher franchise fees and earnings before interest, taxes, depreciation and amortization (EBITDA)-neutral hotel management reimbursable fees.

Systemwide RevPAR grew 4.0% in the quarter. The increase reflects a 7.6% domestic increase, partially offset by a 4.3% decline in international RevPAR, primarily reflecting unfavorable currency movements.

Revenues from the Vacation Exchange and Rentals segment were up 1% year over year to $379.0 million. However, in constant currency, segment revenues remained flat.

Vacation rental revenues went up 6.0% year over year to $176.0 million, while Exchange revenues were down 3% to $187.0 million. In constant currency, exchange revenues declined 2.0% year over year because a 1.6% improvement in average number of members was neutralized by a 3.7% drop in exchange revenue per member.

Revenues from the Vacation Ownership segment rose 8.0% year over year to $593.0 million, driven by higher gross Vacation Ownership Interest (VOI) sales and a lower loan loss provision. Gross VOI sales were up 7% year over year to $410 million, gaining from a 4.3% rise in tour flow and 2.8% increment in volume per guest.

Adjusted EBITDA grew 2.0% year over year to $115 million during the quarter, buoyed by increased revenues.

Share Repurchase

Wyndham has bought back approximately 2.1 million shares for $150 million during the first quarter of 2014.  From Apr 1 through Apr 23, 2014, the company repurchased an additional 0.6 million shares for $42 million. The company's remaining share repurchase authorization is worth $476 million as of Apr 23, 2014.

Guidance for 2014

Wyndham maintained its revenue and EBITDA guidance for 2014. It expects revenues within $5.250–$5.350 billion while adjusted EBITDA is expected in the $1.215 to $1.240 billion range.

The company has raised its earnings guidance for 2014. The company now anticipates adjusted earnings per share within the range of $4.23–$4.33, up from the prior range of $4.18–$4.28. The Zacks Consensus Estimate for 2014 stands at $4.31.

Our Take

Overall, Wyndham’s strong developmental pipeline, significant international exposure and transition to a growing fee-for-service-based business are expected to spur growth. Shareholder-friendly steps, such as dividend hike, also inspire optimism regarding the stock. However, excessive exposure to the European economy and slowdown in business momentum owing to decline in consumer spending in North America may act as headwinds.

Wyndham currently carries a Zacks Rank #4 (Sell).

Among other hoteliers, Marriott International, Inc. (MAR - Analyst Report) is slated to report first-quarter 2013 earnings on Apr 29, whereas Hyatt Hotels Corp. (H - Snapshot Report) is slated to report earnings on Apr 30. Another hotelier, Intercontinental Hotels Group plc (IHG - Snapshot Report) is scheduled to report earnings on May 20.

Read the Full Research Report on WYN
Read the Full Research Report on MAR
Read the Full Research Report on IHG
Read the Full Research Report on H


Zacks Investment Research

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CTPARTNERS… CTP 13.33 +3.49%
SAIA INC SAIA 45.65 +1.00%
VASCO DATA… VDSI 13.57 +0.67%
AMEDISYS IN… AMED 20.18 +0.10%
FIRSTSERVIC… FSRV 55.66 -0.13%