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Wyndham (WYN) Down to Sell on Persistent Economic Woes
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On Dec 27, hospitality company Wyndham Worldwide Corporation was downgraded by a notch to a Zacks Rank #4 (Sell).
Shares of Wyndham have widely underperformed the Zacks categorized Hotels and Motels industry. While the industry gained 27.6% year to date, Wyndham grew only 6.3% in the same time frame.
In addition, downward estimate revisions reflect pessimism regarding the stock’s prospects. The Zacks Consensus Estimate for current quarter earnings has moved south by 2.3%, over the last 60 days. Going forward, headwinds to revenue growth could weigh on its performance and thus reflect in its share price.
Particularly, revenue growth at Wyndham might get restricted because of the lingering political uncertainty in key international markets and significant currency headwinds, which are affecting most of the hotel operators including Marriott International, Inc. (MAR - Free Report) , Hyatt Hotels Corporation (H - Free Report) , Hilton Worldwide Holdings, Inc. (HLT - Free Report) .
Despite immense growth potential, a sluggish economy in Brazil, uncertainty in Africa, macroeconomic headwinds in Venezuela and an economic slowdown in China may keep revenues under pressure.
Wyndham also has a significant number of vacation rental properties in Europe, where the economic/political conditions are expected to be challenging post Brexit. Business in Europe is as it is clouded by the economic uncertainties in the Northern region and deflation in the Eurozone.
Moreover, the company expects soft demand in the oil producing regions, which mainly include parts of Texas, Louisiana, Oklahoma and West Virginia, to continue to hurt RevPAR.
Though the U.S. dollar weakened slightly in 2016, compared with the previous year, negative currency translation remains a major concern for Wyndham as it has considerable international operations.
Nonetheless, with the improving economic environment in the U.S., the demand for hotels has started to grow. Notably, Wyndham is generating room-rate gains in the domestic upscale and midscale segments with an increase in occupancy.
Wyndham is consistently trying to augment its presence worldwide and has expansion plans for the Asia Pacific, Europe, Middle East, Africa and Indian Ocean (EMEAI) regions. Expansion in these lucrative markets should help the company gain market share in the hospitality industry.
Also, Wyndham Loyalty and Rewards Program coupled with other initiatives to increase occupancy should drive growth.
Meanwhile, among Wyndham’s most important strategic initiatives is expanding the number of new owners as they are crucial to the long-term health of the business. However, bringing in new owners is more costly and takes more effort, which is reflected in the company’s decreasing Volume per Guest (VPG).
Owner tour flow is also getting dampened by the company’s focus on new owners as well as more targeted marketing efforts. Thus, as the company starts to focus more on increasing number of owners, short-term effects on revenues might not be favorable.
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Wyndham (WYN) Down to Sell on Persistent Economic Woes
On Dec 27, hospitality company Wyndham Worldwide Corporation was downgraded by a notch to a Zacks Rank #4 (Sell).
Shares of Wyndham have widely underperformed the Zacks categorized Hotels and Motels industry. While the industry gained 27.6% year to date, Wyndham grew only 6.3% in the same time frame.
In addition, downward estimate revisions reflect pessimism regarding the stock’s prospects. The Zacks Consensus Estimate for current quarter earnings has moved south by 2.3%, over the last 60 days. Going forward, headwinds to revenue growth could weigh on its performance and thus reflect in its share price.
Particularly, revenue growth at Wyndham might get restricted because of the lingering political uncertainty in key international markets and significant currency headwinds, which are affecting most of the hotel operators including Marriott International, Inc. (MAR - Free Report) , Hyatt Hotels Corporation (H - Free Report) , Hilton Worldwide Holdings, Inc. (HLT - Free Report) .
Despite immense growth potential, a sluggish economy in Brazil, uncertainty in Africa, macroeconomic headwinds in Venezuela and an economic slowdown in China may keep revenues under pressure.
Wyndham also has a significant number of vacation rental properties in Europe, where the economic/political conditions are expected to be challenging post Brexit. Business in Europe is as it is clouded by the economic uncertainties in the Northern region and deflation in the Eurozone.
Moreover, the company expects soft demand in the oil producing regions, which mainly include parts of Texas, Louisiana, Oklahoma and West Virginia, to continue to hurt RevPAR.
Though the U.S. dollar weakened slightly in 2016, compared with the previous year, negative currency translation remains a major concern for Wyndham as it has considerable international operations.
Nonetheless, with the improving economic environment in the U.S., the demand for hotels has started to grow. Notably, Wyndham is generating room-rate gains in the domestic upscale and midscale segments with an increase in occupancy.
Wyndham is consistently trying to augment its presence worldwide and has expansion plans for the Asia Pacific, Europe, Middle East, Africa and Indian Ocean (EMEAI) regions. Expansion in these lucrative markets should help the company gain market share in the hospitality industry.
Also, Wyndham Loyalty and Rewards Program coupled with other initiatives to increase occupancy should drive growth.
Meanwhile, among Wyndham’s most important strategic initiatives is expanding the number of new owners as they are crucial to the long-term health of the business. However, bringing in new owners is more costly and takes more effort, which is reflected in the company’s decreasing Volume per Guest (VPG).
Owner tour flow is also getting dampened by the company’s focus on new owners as well as more targeted marketing efforts. Thus, as the company starts to focus more on increasing number of owners, short-term effects on revenues might not be favorable.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>