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Choice Hotels International, Inc. (CHH - Free Report) delivered impressive first-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Patrick Pacious, president and CEO of Choice Hotels, stated, "Building on our record 2022 earnings results, our distinct growth strategy and best-in-class franchising business engine drove first quarter performance to new levels, with adjusted EBITDA increasing by 10% year-over-year. At the same time, we are ahead of plan integrating the Radisson Hotels Americas business unit, which we expect will further accelerate our transformative growth."
Q1 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.12, surpassing the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company reported an adjusted EPS of $1.03.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $332.8 million surpassed the consensus mark of $316 million by 4.9%. The metric rose 29.1% from the year-ago quarter’s level.
Franchising & Royalties
During the first quarter, domestic royalty fees increased 18% year over year to $107.5 million. Domestic revenues per available room (RevPAR) increased 5.9% from first-quarter 2022 levels. The uptick was driven by a 5.2% increase in the average daily rate. During the quarter, effective royalty rate increased 6 basis points year over year to 4.99%.
During the first quarter of 2023, domestic franchise agreements awarded for the company's upscale segment increased 13% year over year. As of Mar 31, 2023, the number of domestic pipelines increased 11% year over year to 925 hotels.
Operating Results
Total operating expenses during first-quarter 2023 increased 61% year over year to $254.9 million. During the quarter, adjusted EBITDA rose 10.1% year over year to $106.5 million.
Balance Sheet
As of Mar 31, 2023, Choice Hotels had cash and cash equivalents of $31.7 million compared with $41.6 million as of Dec 31, 2022.
Long-term debt at the end of the first quarter was $1,374.8 million compared with $1,200.5 million reported in the previous quarter.
During the first quarter, Goodwill (as a percentage of total assets) came in at 10.5% compared with 10.4% in fourth-quarter 2022 end.
Outlook
In 2023, the company anticipates adjusted net income in the range of $292-$302 million. Adjusted EBITDA is expected to be between $525 million and $540 million, up from the previous expectation of $520-$540 million. The company expects adjusted EPS to be between $5.70 and $5.90.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022. In 2023, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits compared with 2022 levels.
Other Updates
The domestic extended-stay pipeline reached 475 hotels as of Mar 31, 2022. At the end of first-quarter 2022, the number of domestic hotels and rooms increased 6.5% and 8.2%, respectively, year over year.
Zacks Rank & Key Picks
Choice Hotels currently carries a Zacks Rank #3 (Hold).
PlayAGS sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 155.2%, on average. The stock has declined 0.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,856.7%, respectively, from the year-ago period’s estimated levels.
Boyd Gaming carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 30.2% in the past year.
The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 1.9% and 2.6%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 115.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.
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Choice Hotels (CHH) Q1 Earnings & Revenues Beat Estimates
Choice Hotels International, Inc. (CHH - Free Report) delivered impressive first-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Patrick Pacious, president and CEO of Choice Hotels, stated, "Building on our record 2022 earnings results, our distinct growth strategy and best-in-class franchising business engine drove first quarter performance to new levels, with adjusted EBITDA increasing by 10% year-over-year. At the same time, we are ahead of plan integrating the Radisson Hotels Americas business unit, which we expect will further accelerate our transformative growth."
Q1 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.12, surpassing the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company reported an adjusted EPS of $1.03.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Choice Hotels International, Inc. price-consensus-eps-surprise-chart | Choice Hotels International, Inc. Quote
Quarterly revenues of $332.8 million surpassed the consensus mark of $316 million by 4.9%. The metric rose 29.1% from the year-ago quarter’s level.
Franchising & Royalties
During the first quarter, domestic royalty fees increased 18% year over year to $107.5 million. Domestic revenues per available room (RevPAR) increased 5.9% from first-quarter 2022 levels. The uptick was driven by a 5.2% increase in the average daily rate. During the quarter, effective royalty rate increased 6 basis points year over year to 4.99%.
During the first quarter of 2023, domestic franchise agreements awarded for the company's upscale segment increased 13% year over year. As of Mar 31, 2023, the number of domestic pipelines increased 11% year over year to 925 hotels.
Operating Results
Total operating expenses during first-quarter 2023 increased 61% year over year to $254.9 million. During the quarter, adjusted EBITDA rose 10.1% year over year to $106.5 million.
Balance Sheet
As of Mar 31, 2023, Choice Hotels had cash and cash equivalents of $31.7 million compared with $41.6 million as of Dec 31, 2022.
Long-term debt at the end of the first quarter was $1,374.8 million compared with $1,200.5 million reported in the previous quarter.
During the first quarter, Goodwill (as a percentage of total assets) came in at 10.5% compared with 10.4% in fourth-quarter 2022 end.
Outlook
In 2023, the company anticipates adjusted net income in the range of $292-$302 million. Adjusted EBITDA is expected to be between $525 million and $540 million, up from the previous expectation of $520-$540 million. The company expects adjusted EPS to be between $5.70 and $5.90.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022. In 2023, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits compared with 2022 levels.
Other Updates
The domestic extended-stay pipeline reached 475 hotels as of Mar 31, 2022. At the end of first-quarter 2022, the number of domestic hotels and rooms increased 6.5% and 8.2%, respectively, year over year.
Zacks Rank & Key Picks
Choice Hotels currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are PlayAGS, Inc. (AGS - Free Report) , Boyd Gaming Corporation (BYD - Free Report) and Crocs, Inc. (CROX - Free Report) .
PlayAGS sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 155.2%, on average. The stock has declined 0.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,856.7%, respectively, from the year-ago period’s estimated levels.
Boyd Gaming carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 30.2% in the past year.
The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 1.9% and 2.6%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 115.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.