Choice Hotels International, Inc. (CHH Quick QuoteCHH - Free Report) is one of the largest hotel franchise companies in the world. It owns hotels, inns, all-suite hotels and resorts, some of which are under development, across the globe under various brands. This Zacks Rank #2 (Buy) company has good prospects and should make a value addition to your portfolio.

What Makes Choice Hotels a Solid Pick?

Stock Price Movement: Choice Hotels’ shares have increased 41.2% over the past six months widely outperforming the Zacks categorized Hotels and Motels industry’s gain of 11.9%. Higher earnings growth, given solid revenue per available room (RevPAR) trends, should aid the stock in maintaining its solid performance in the quarters ahead.

Efforts to Increase Franchise Profitability: The company’s efforts to enhance franchise profitability through its SmartRates proprietary pricing optimization system and Choice Privileges loyalty program is resulting in strong RevPAR results.

In fact, the company believes that its domestic RevPAR results will continue to outperform the industry in 2017. The results are expected to be driven by continual expansion of the membership, adoption of its smart rate technology and other inventive strategies designed to persistently improve the RevPAR performance of its franchisees. Notably, Choice Hotels expects RevPAR to increase between 3% and 4% for full-year 2017.

Earnings & Revenue Growth: Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects (and stock price gains) for the company in question.

While Choice Hotels has a historical earnings per share (EPS) growth rate of 15.6% compared with the industry average of 9%, investors should really focus on its projected growth. The company is looking to grow at a rate of 13.3% higher than the industry average of 8.2%.

Propelling the earnings forward is the company’s solid revenue growth story. Notably, the projected sales growth for the current year is 6.8%, which is higher than the broader industry’s estimate of 4.4%.

Earnings History and Estimate Revisions: Choice Hotels’ earnings surpassed the Zacks Consensus Estimate in three of the trailing for quarters, with an average beat of 2.03%.

Moreover, over the past 60 days, current quarter and current year earnings estimates have moved up 22.5% and 5.2%, respectively. The positive earnings estimate revisions indicate analysts’ confidence in the stock and also adds to the optimism.

Other Stocks to Consider

Other favorably-placed stocks in the broader Consumer Discretionary sector include Marcus Corporation (MCS Quick QuoteMCS - Free Report) , Intrawest Resorts Holdings, Inc. (SNOW Quick QuoteSNOW - Free Report) and Vail Resorts, Inc. (MTN Quick QuoteMTN - Free Report) . While Marcus sports a Zacks Rank #1 (Strong Buy), Intrawest Resorts and Vail Resorts carry the same Zacks Rank as Choice Hotels. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Marcus’ 2017 earnings climbed 7.9%, over the past 60 days. Further, for 2017, EPS is expected to grow 10.3%.

The Zacks Consensus Estimate for Intrawest Resorts Holdings’ fiscal 2017 earnings climbed nearly 26%, over the past 60 days. Moreover, the trailing four-quarter average earnings surprise is a positive 8.71%.

The Zacks Consensus Estimate for Vail Resorts’ fiscal 2017 earnings moved up 4.6%, over the last 60 days. Further, for fiscal 2017, EPS is expected to improve 36%.

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