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Wyndham Worldwide Corporation posted mixed results for the third quarter of 2016, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Earnings and Revenue Discussion
Adjusted earnings of $1.89 per share beat the Zacks Consensus Estimate of $1.87 by 1.1%. Earnings were also up 6.2% year over year, reflecting higher revenues and lower share count.
Net revenues of $1.57 billion improved 0.6% year over year on the back of increased contribution from the hotel group and the destination network segments. Revenues, however, missed the Zacks Consensus Estimate of $1.59 billion by 1.3%.
Adjusted EBITDA (excluding share-based compensation expense) grew 3% year over year to $423 million. Meanwhile, at constant currency, the figure grew 5%.
Wyndham has three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals) and Vacation Ownership.
Hotel Group revenues were $364 million, up around 2% from the year-ago figure. Revenues reflected higher royalties, growth in the company's Wyndham Rewards credit card program and fees associated with the company's global franchise conference, partially offset by lower reimbursable property management revenues.
Domestic RevPAR inched up 1.9%. At constant currency, total system-wide RevPAR increased 1.4% year over year reflecting weak demand in the U.S. and Canadian oil markets, along with decelerating industry RevPAR trends.
Adjusted EBITDA increased 8% to $117 million driven by growth in royalties and the company’s the Wyndham Rewards credit card program and prudent expense management.
Revenues at Destination Network were $486 million, an increase of 2% from the year-ago figure. However, at constant currency and excluding acquisitions, revenues recorded an improvement of 5%.
Exchange revenues grew 1.3% to $159 million. However, the figure grew 2% at constant currency, as the average number of members inched up 0.9% and exchange revenue per member rose 1.4%.
Vacation rental revenues were $304 million, reflecting 2.7% year-over-year growth. Moreover, at constant currency and excluding acquisitions, vacation rental revenues inched up 6% driven by an 8% increase in transaction volumes, partly offset by a decline of 1.7% in average net price per vacation rental.
Adjusted EBITDA inched up 4% to $142 million. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA grew 8%.
Revenues at Vacation Ownership declined 0.8% year over year to $744 million.
Net VOI sales in the third quarter declined 2% due to a higher provision for loan losses while Gross VOI sales remained flat. These results reflect tour growth of 1.3%, somewhat offset by a 1.4% decline in volume per guest (VPG).
Adjusted EBITDA decreased 3% to $195 million on the back of higher loan loss provision and higher marketing costs, partially offset by higher property management fees, increased consumer financing income and expense management.
The company repurchased 2.1 million shares for $150 million during the quarter.
2016 Guidance
For 2016, the company projects adjusted net income of approximately $630 million, down from the previously expected range of $635–$651 million. Notably, Wyndham reduced the higher end of its adjusted earnings per share expectation as well. It now expects adjusted EPS in the band of $5.68–$5.71, down from the prior guidance of $5.68–$5.82.
The company lowered its 2016 revenue guidance to roughly $5.65 billion from the range of $5.65–$5.80 billion projected earlier.
Meanwhile, it expects adjusted EBITDA to be approximately $1.375 billion, the lower end of its previously issued guidance range of $1.375–$1.400 billion.
Intrawest Resorts’ next fiscal year growth estimate is pegged at 40% compared with the industry average of 10.8%.
Peak Resorts’ current year growth estimate is pegged at 200% compared with the industry average of 21.6%.
Red Lion Hotels’ current year growth estimate is pegged at 41% compared with the industry average of 21.6%.
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Wyndham (WYN) Beats Q3 Earnings, Lags Revenue Estimates
Wyndham Worldwide Corporation posted mixed results for the third quarter of 2016, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Earnings and Revenue Discussion
Adjusted earnings of $1.89 per share beat the Zacks Consensus Estimate of $1.87 by 1.1%. Earnings were also up 6.2% year over year, reflecting higher revenues and lower share count.
Net revenues of $1.57 billion improved 0.6% year over year on the back of increased contribution from the hotel group and the destination network segments. Revenues, however, missed the Zacks Consensus Estimate of $1.59 billion by 1.3%.
Inside the Headline Numbers
Adjusted EBITDA (excluding share-based compensation expense) grew 3% year over year to $423 million. Meanwhile, at constant currency, the figure grew 5%.
Wyndham has three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals) and Vacation Ownership.
Hotel Group revenues were $364 million, up around 2% from the year-ago figure. Revenues reflected higher royalties, growth in the company's Wyndham Rewards credit card program and fees associated with the company's global franchise conference, partially offset by lower reimbursable property management revenues.
Domestic RevPAR inched up 1.9%. At constant currency, total system-wide RevPAR increased 1.4% year over year reflecting weak demand in the U.S. and Canadian oil markets, along with decelerating industry RevPAR trends.
Adjusted EBITDA increased 8% to $117 million driven by growth in royalties and the company’s the Wyndham Rewards credit card program and prudent expense management.
Revenues at Destination Network were $486 million, an increase of 2% from the year-ago figure. However, at constant currency and excluding acquisitions, revenues recorded an improvement of 5%.
Exchange revenues grew 1.3% to $159 million. However, the figure grew 2% at constant currency, as the average number of members inched up 0.9% and exchange revenue per member rose 1.4%.
Vacation rental revenues were $304 million, reflecting 2.7% year-over-year growth. Moreover, at constant currency and excluding acquisitions, vacation rental revenues inched up 6% driven by an 8% increase in transaction volumes, partly offset by a decline of 1.7% in average net price per vacation rental.
Adjusted EBITDA inched up 4% to $142 million. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA grew 8%.
Revenues at Vacation Ownership declined 0.8% year over year to $744 million.
Net VOI sales in the third quarter declined 2% due to a higher provision for loan losses while Gross VOI sales remained flat. These results reflect tour growth of 1.3%, somewhat offset by a 1.4% decline in volume per guest (VPG).
Adjusted EBITDA decreased 3% to $195 million on the back of higher loan loss provision and higher marketing costs, partially offset by higher property management fees, increased consumer financing income and expense management.
WYNDHAM WORLDWD Price, Consensus and EPS Surprise
WYNDHAM WORLDWD Price, Consensus and EPS Surprise | WYNDHAM WORLDWD Quote
Share Repurchase
The company repurchased 2.1 million shares for $150 million during the quarter.
2016 Guidance
For 2016, the company projects adjusted net income of approximately $630 million, down from the previously expected range of $635–$651 million. Notably, Wyndham reduced the higher end of its adjusted earnings per share expectation as well. It now expects adjusted EPS in the band of $5.68–$5.71, down from the prior guidance of $5.68–$5.82.
The company lowered its 2016 revenue guidance to roughly $5.65 billion from the range of $5.65–$5.80 billion projected earlier.
Meanwhile, it expects adjusted EBITDA to be approximately $1.375 billion, the lower end of its previously issued guidance range of $1.375–$1.400 billion.
Zacks Rank and Stocks to Consider
Wyndham presently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the sector include Intrawest Resorts Holdings, Inc. (SNOW - Free Report) , Peak Resorts, Inc. and Red Lion Hotels Corporation . All the stocks sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intrawest Resorts’ next fiscal year growth estimate is pegged at 40% compared with the industry average of 10.8%.
Peak Resorts’ current year growth estimate is pegged at 200% compared with the industry average of 21.6%.
Red Lion Hotels’ current year growth estimate is pegged at 41% compared with the industry average of 21.6%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>