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Choice Hotels International, Inc. (CHH - Free Report) delivered mixed third-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Also, the top and bottom lines increased on a year-over-year basis.
The year-over-year growth is attributable to the company’s top-tier business delivery engine, synergies through the successful integration of Radisson Americas and organic growth of its brand portfolio, focused on hotels that generate higher royalties per unit. The company also aims to remain focused on its robust organic earnings growth strategy and pursue inorganic growth to drive long-term shareholder value.
Following the results, shares of this hotel franchisor inched down 0.6% during the trading session on Nov 7.
Q3 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (“EPS”) of $1.82, missing the Zacks Consensus Estimate of $1.87 by 2.7%. The company reported an adjusted EPS of $1.56 in the prior-year quarter.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $425.6 million surpassed the consensus mark of $423.3 million by 0.5%. The metric rose 3% from the year-ago quarter’s level of $414.3 million.
Franchising & Royalties
During the third quarter, royalty, licensing and management fees increased 3% year over year to $148.5 million. During the quarter, domestic revenues per available room (RevPAR) decreased by 80 basis points (bps) year over year.
During the quarter, the effective royalty rate increased 6 bps year over year to 4.99%.
Operating Results
Total operating expenses during third-quarter 2023 increased 3% year over year to $290.5 million. Our estimate for the metric was $301.1 million.
During the quarter, adjusted EBITDA rose 11.8% year over year to $155.9 million. Our estimate for the metric was $157.2 million.
Balance Sheet
As of Sep 30, 2023, Choice Hotels had cash and cash equivalents of $36.4 million compared with $41.6 million as of Dec 31, 2022.
Long-term debt at the end of the third quarter was $1,391.3 million compared with $1,200.5 million reported in the 2022-end.
During the third quarter, Goodwill came in at $220.2 million compared with $218.7 million at 2022-end.
Raised 2023 Outlook
In 2023, Choice Hotels now anticipates adjusted net income in the range of $302-$308 million, up from the previous expectation of $298-$306 million.
Adjusted EBITDA is expected to be between $535 and $540 million compared with the previous expectation of $530-$540 million.
The company now expects adjusted EPS to be between $5.95 and $6.03 compared with the prior expectation of $5.86-$6.01. The Zacks Consensus Estimate for 2023 earnings is pegged at $5.99.
Domestic RevPAR growth in 2023 is estimated at approximately 1% compared with 2022. For the same period, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits on a year-over-year basis.
Other Updates
The domestic extended-stay pipeline increased 12% year over year to more than 47,000 rooms as of Sep 30, 2023. At the end of third-quarter 2023, the number of domestic hotels and rooms was more than 6,200 and 490,000, respectively. The company’s domestic pipeline reached about 86,000 rooms.
JAKKS Pacific, Inc. (JAKK - Free Report) reported third-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. While revenues outpaced the consensus estimate for the eighth straight quarter, earnings beat the same for the third consecutive quarter.
The company’s product margins have seen a notable boost this year, thanks to a more stable supply chain and reduced promotional activities compared with the previous year.
Caesars Entertainment, Inc. (CZR - Free Report) reported impressive third-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Also, the top and bottom lines increased on a year-over-year basis.
The company’s uptrend was primarily driven by the solid performance of the Regional segment on the back of the opening of two temporary gaming facilities. Also, gaming revenues from the Caesars Digital segment, attributable to additional state launches of its online and retail Caesars Sportsbooks, added to the growth momentum. Improvements in the year-over-year hotel occupancy rates within the Las Vegas segment bode well despite the ongoing economic uncertainties.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
The upside was primarily driven by solid cruising demand, improvements in load factors and onboard spending momentum. A rise in close-in demand (at higher prices) and continued strength in onboard revenues added to the positives.
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Choice Hotels (CHH) Q3 Earnings Miss, Revenues Top, View Raised
Choice Hotels International, Inc. (CHH - Free Report) delivered mixed third-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Also, the top and bottom lines increased on a year-over-year basis.
The year-over-year growth is attributable to the company’s top-tier business delivery engine, synergies through the successful integration of Radisson Americas and organic growth of its brand portfolio, focused on hotels that generate higher royalties per unit. The company also aims to remain focused on its robust organic earnings growth strategy and pursue inorganic growth to drive long-term shareholder value.
Following the results, shares of this hotel franchisor inched down 0.6% during the trading session on Nov 7.
Q3 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (“EPS”) of $1.82, missing the Zacks Consensus Estimate of $1.87 by 2.7%. The company reported an adjusted EPS of $1.56 in the prior-year quarter.
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 $425.6 million surpassed the consensus mark of $423.3 million by 0.5%. The metric rose 3% from the year-ago quarter’s level of $414.3 million.
Franchising & Royalties
During the third quarter, royalty, licensing and management fees increased 3% year over year to $148.5 million. During the quarter, domestic revenues per available room (RevPAR) decreased by 80 basis points (bps) year over year.
During the quarter, the effective royalty rate increased 6 bps year over year to 4.99%.
Operating Results
Total operating expenses during third-quarter 2023 increased 3% year over year to $290.5 million. Our estimate for the metric was $301.1 million.
During the quarter, adjusted EBITDA rose 11.8% year over year to $155.9 million. Our estimate for the metric was $157.2 million.
Balance Sheet
As of Sep 30, 2023, Choice Hotels had cash and cash equivalents of $36.4 million compared with $41.6 million as of Dec 31, 2022.
Long-term debt at the end of the third quarter was $1,391.3 million compared with $1,200.5 million reported in the 2022-end.
During the third quarter, Goodwill came in at $220.2 million compared with $218.7 million at 2022-end.
Raised 2023 Outlook
In 2023, Choice Hotels now anticipates adjusted net income in the range of $302-$308 million, up from the previous expectation of $298-$306 million.
Adjusted EBITDA is expected to be between $535 and $540 million compared with the previous expectation of $530-$540 million.
The company now expects adjusted EPS to be between $5.95 and $6.03 compared with the prior expectation of $5.86-$6.01. The Zacks Consensus Estimate for 2023 earnings is pegged at $5.99.
Domestic RevPAR growth in 2023 is estimated at approximately 1% compared with 2022. For the same period, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits on a year-over-year basis.
Other Updates
The domestic extended-stay pipeline increased 12% year over year to more than 47,000 rooms as of Sep 30, 2023. At the end of third-quarter 2023, the number of domestic hotels and rooms was more than 6,200 and 490,000, respectively. The company’s domestic pipeline reached about 86,000 rooms.
Zacks Rank
Choice Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Recent Consumer Discretionary Releases
JAKKS Pacific, Inc. (JAKK - Free Report) reported third-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. While revenues outpaced the consensus estimate for the eighth straight quarter, earnings beat the same for the third consecutive quarter.
The company’s product margins have seen a notable boost this year, thanks to a more stable supply chain and reduced promotional activities compared with the previous year.
Caesars Entertainment, Inc. (CZR - Free Report) reported impressive third-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Also, the top and bottom lines increased on a year-over-year basis.
The company’s uptrend was primarily driven by the solid performance of the Regional segment on the back of the opening of two temporary gaming facilities. Also, gaming revenues from the Caesars Digital segment, attributable to additional state launches of its online and retail Caesars Sportsbooks, added to the growth momentum. Improvements in the year-over-year hotel occupancy rates within the Las Vegas segment bode well despite the ongoing economic uncertainties.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
The upside was primarily driven by solid cruising demand, improvements in load factors and onboard spending momentum. A rise in close-in demand (at higher prices) and continued strength in onboard revenues added to the positives.