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Factors Setting the Tone for Choice Hotels' (CHH) Q4 Earnings
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Choice Hotels International, Inc. (CHH - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 20, 2023, before the opening bell.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate, but the revenues surpassed the same. Earnings and revenues increased 16.7% and 3% from the year-ago quarter’s figures, respectively.
CHH topped the consensus mark in three of the last four quarters and missed on the other occasion, the average beat being 5.2%.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has remained unchanged at $1.35 in the past seven days. The estimated figure indicates a 7.1% increase from $1.26 per share reported in the year-ago quarter.
The consensus mark for revenues is pegged at $369.8 million, suggesting an increase of 2.2% from the prior-year quarter’s reported figure.
Choice Hotels International, Inc. Price and EPS Surprise
Let’s discuss the factors that are likely to be reflected in the company’s quarter-to-be-reported performance.
Factors to Note
Choice Hotels’ fourth-quarter earnings and revenues are expected to increase year over year, driven by improving demand, expansion efforts and enhancement of the mid-scale brand. Also, the focus on enhancing unit economics through a new digital registration capability is likely to have aided the company’s performance in the to-be-reported quarter. The cost-effective cloud-based solution simplifies the hotel’s registration process for front desk staff, saves on labor, speeds up check-ins and enhances the overall guest experience.
Robust Franchised and Managed Properties as well as Owned Hotels revenues are likely to have aided the company’s results. Per our model, fourth-quarter revenues from Franchised and Managed Properties and Platform and Procurement Services Fees are estimated to be $191.8 million and $17.2 million, respectively. Owned Hotels and Other Revenues are expected to increase year over year by 24.2% and 21.6% to $26.8 million and $16 million, respectively.
The company anticipates that if inflation rates increase moderately, it will likely lead to comparable or higher increases in hotel room rates. We expect Royalty, Licensing and Management Fees and Initial Franchise Fees to decline 5.8% and 1% year over year to $108.8 million and 6.4 million, respectively.
Increased operating expenses are likely to have negatively impacted the company’s margin in the to-be-reported quarter. We expect total operating expenses to increase 7.9% year over year to $307.1 million.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Choice Hotels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: CHH has an Earnings ESP of +1.48%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to beat estimates this time around.
Six Flags Entertainment Corporation (SIX - Free Report) has an Earnings ESP of +21.85% and a Zacks Rank of 2 at present.
SIX’s earnings for the to-be-reported quarter are expected to decrease 15.6% from the prior-year levels. It reported better-than-expected earnings in one of the trailing four quarters and missed on the other three occasions, the negative surprise being 9.3%, on average.
Academy Sports and Outdoors, Inc. (ASO - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
ASO’s earnings for the to-be-reported quarter are expected to increase 13.2% from the prior-year levels. It reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, the negative surprise being 4.7%, on average.
Carnival Corporation & plc (CCL - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank of 2 at present.
CCL’s earnings for the to-be-reported quarter are expected to increase 67.3% from the prior-year levels. It reported better-than-expected earnings in all of the trailing four quarters, the positive surprise being 19.2%, on average.
Image: Bigstock
Factors Setting the Tone for Choice Hotels' (CHH) Q4 Earnings
Choice Hotels International, Inc. (CHH - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 20, 2023, before the opening bell.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate, but the revenues surpassed the same. Earnings and revenues increased 16.7% and 3% from the year-ago quarter’s figures, respectively.
CHH topped the consensus mark in three of the last four quarters and missed on the other occasion, the average beat being 5.2%.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has remained unchanged at $1.35 in the past seven days. The estimated figure indicates a 7.1% increase from $1.26 per share reported in the year-ago quarter.
The consensus mark for revenues is pegged at $369.8 million, suggesting an increase of 2.2% from the prior-year quarter’s reported figure.
Choice Hotels International, Inc. Price and EPS Surprise
Choice Hotels International, Inc. price-eps-surprise | Choice Hotels International, Inc. Quote
Let’s discuss the factors that are likely to be reflected in the company’s quarter-to-be-reported performance.
Factors to Note
Choice Hotels’ fourth-quarter earnings and revenues are expected to increase year over year, driven by improving demand, expansion efforts and enhancement of the mid-scale brand. Also, the focus on enhancing unit economics through a new digital registration capability is likely to have aided the company’s performance in the to-be-reported quarter. The cost-effective cloud-based solution simplifies the hotel’s registration process for front desk staff, saves on labor, speeds up check-ins and enhances the overall guest experience.
Robust Franchised and Managed Properties as well as Owned Hotels revenues are likely to have aided the company’s results. Per our model, fourth-quarter revenues from Franchised and Managed Properties and Platform and Procurement Services Fees are estimated to be $191.8 million and $17.2 million, respectively. Owned Hotels and Other Revenues are expected to increase year over year by 24.2% and 21.6% to $26.8 million and $16 million, respectively.
The company anticipates that if inflation rates increase moderately, it will likely lead to comparable or higher increases in hotel room rates. We expect Royalty, Licensing and Management Fees and Initial Franchise Fees to decline 5.8% and 1% year over year to $108.8 million and 6.4 million, respectively.
Increased operating expenses are likely to have negatively impacted the company’s margin in the to-be-reported quarter. We expect total operating expenses to increase 7.9% year over year to $307.1 million.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Choice Hotels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: CHH has an Earnings ESP of +1.48%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to beat estimates this time around.
Six Flags Entertainment Corporation (SIX - Free Report) has an Earnings ESP of +21.85% and a Zacks Rank of 2 at present.
SIX’s earnings for the to-be-reported quarter are expected to decrease 15.6% from the prior-year levels. It reported better-than-expected earnings in one of the trailing four quarters and missed on the other three occasions, the negative surprise being 9.3%, on average.
Academy Sports and Outdoors, Inc. (ASO - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
ASO’s earnings for the to-be-reported quarter are expected to increase 13.2% from the prior-year levels. It reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, the negative surprise being 4.7%, on average.
Carnival Corporation & plc (CCL - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank of 2 at present.
CCL’s earnings for the to-be-reported quarter are expected to increase 67.3% from the prior-year levels. It reported better-than-expected earnings in all of the trailing four quarters, the positive surprise being 19.2%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.