It has been about a month since the last earnings report for Extended Stay America . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Extended Stay America due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Extended Stay Q1 Earnings & Revenues Beat Estimates
Extended Stay America reported first-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. However, the top and bottom line declined on a year-over-year basis.
Earnings & Revenue Discussion
During the first quarter, adjusted earnings per share of 4 cents surpassed the Zacks Consensus Estimate of a loss of 1 cent. However, the bottom line declined 42.9% from 7 cents reported in the prior-year quarter.
In the quarter under review, total revenues came in at $259.6 million, beating the consensus mark of $253 million by 2.6%. However, the top line declined 2.5% on a year-over-year basis primarily due to the negative impacts of COVID-19.
Comparable system-wide RevPAR of $43.56 fell 1.7% on a year-over-year basis due to a 5.7% drop in average daily rate. However, this was partially offset by a 310-basis point (bps) increase in occupancy rate.
Meanwhile, comparable company-owned RevPAR fell 1.6% year over year to $44.42 during the first quarter compared with $45.15 in the prior-year quarter.
Operating Highlights
In the quarter under review, Extended Stay’s hotel operating margin came in at 43.4%, reflecting a decline of 230 bps from the prior-year quarter’s level. The downside was primarily due to a fall in RevPAR (owing to the pandemic) as well as a rise in hotel operating expenses. Hotel operating expenses were primarily driven by a rise in labor, insurance and indirect expenses. However, this was partially offset by lower distribution costs, credit card processing fees and breakfast costs.
Adjusted EBITDA totaled $90.9 million, down 7% from the comparable year-ago period due to a decline in comparable system-wide RevPAR.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2021, were $357.9 million compared with $396.8 million on Dec 31, 2020. At the end of the first quarter, total debt (net of unamortized deferred financing costs and debt discounts) amounted to $2,643.9 million compared with $2,683.6 million at 2020-end.
Extended Stay’s capital expenditures in the quarter under review came in at $30.4 million. Notably, renovation capital of $3.6 million and new hotel development capital of $6.2 million were included in the same.
Unit Developments
During the first quarter, the company opened two company-owned hotel and three franchised hotels.
As of Mar 31, 2021, the company had a pipeline of 51 hotels, of which six hotels were company-owned and 45 hotels were third-party related. Altogether, the hotels have approximately 6,200 rooms.
2021 Outlook
Owing to the company’s pending acquisition by affiliates of The Blackstone Group Inc. and Starwood Capital Inc., Extended Stay has decided not to issue its full-year guidance at the moment.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Extended Stay America has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Extended Stay America has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Image: Bigstock
Why Is Extended Stay America (STAY) Up 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Extended Stay America . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Extended Stay America due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Extended Stay Q1 Earnings & Revenues Beat Estimates
Extended Stay America reported first-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. However, the top and bottom line declined on a year-over-year basis.
Earnings & Revenue Discussion
During the first quarter, adjusted earnings per share of 4 cents surpassed the Zacks Consensus Estimate of a loss of 1 cent. However, the bottom line declined 42.9% from 7 cents reported in the prior-year quarter.
In the quarter under review, total revenues came in at $259.6 million, beating the consensus mark of $253 million by 2.6%. However, the top line declined 2.5% on a year-over-year basis primarily due to the negative impacts of COVID-19.
Comparable system-wide RevPAR of $43.56 fell 1.7% on a year-over-year basis due to a 5.7% drop in average daily rate. However, this was partially offset by a 310-basis point (bps) increase in occupancy rate.
Meanwhile, comparable company-owned RevPAR fell 1.6% year over year to $44.42 during the first quarter compared with $45.15 in the prior-year quarter.
Operating Highlights
In the quarter under review, Extended Stay’s hotel operating margin came in at 43.4%, reflecting a decline of 230 bps from the prior-year quarter’s level. The downside was primarily due to a fall in RevPAR (owing to the pandemic) as well as a rise in hotel operating expenses. Hotel operating expenses were primarily driven by a rise in labor, insurance and indirect expenses. However, this was partially offset by lower distribution costs, credit card processing fees and breakfast costs.
Adjusted EBITDA totaled $90.9 million, down 7% from the comparable year-ago period due to a decline in comparable system-wide RevPAR.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2021, were $357.9 million compared with $396.8 million on Dec 31, 2020. At the end of the first quarter, total debt (net of unamortized deferred financing costs and debt discounts) amounted to $2,643.9 million compared with $2,683.6 million at 2020-end.
Extended Stay’s capital expenditures in the quarter under review came in at $30.4 million. Notably, renovation capital of $3.6 million and new hotel development capital of $6.2 million were included in the same.
Unit Developments
During the first quarter, the company opened two company-owned hotel and three franchised hotels.
As of Mar 31, 2021, the company had a pipeline of 51 hotels, of which six hotels were company-owned and 45 hotels were third-party related. Altogether, the hotels have approximately 6,200 rooms.
2021 Outlook
Owing to the company’s pending acquisition by affiliates of The Blackstone Group Inc. and Starwood Capital Inc., Extended Stay has decided not to issue its full-year guidance at the moment.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Extended Stay America has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Extended Stay America has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.