A month has gone by since the last earnings report for Wyndham Worldwide Corp . Shares have lost about 5.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WYN due for a breakout? 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 drivers.
Recent Earnings
Wyndham Worldwide Corporation reported mixed fourth-quarter 2017 results wherein earnings surpassed the Zacks Consensus Estimate while revenues lagged the same.
Adjusted earnings of $1.49 per share beat the consensus estimate of $1.35 by 10.4%. Also, the bottom line was up 9.6% year over year on the back of higher revenues as well as the company’s share repurchase program, partly offset by higher interest expenses.
Net revenues from continuing operations were $1.2 billion and improved 4% from the prior-year quarter on the back of increased contribution from all its segments. However, the top line lagged the consensus estimate of $1.4 billion by 14.3%.
Fourth Quarter Unit Performances
Notably, Wyndham has been functioning through its three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals), and Vacation Ownership.
Hotel Group revenues were $332 million, up 5% from the year-ago figure, which reflected higher franchise and royalty fees, increased pass-through marketing, reservation as well as growth in Wyndham Rewards revenues. Domestic same-store RevPAR (revenues per available room) improved 4.5%. At constant currency, global system-wide same store RevPAR increased 4.6% year over year. Adjusted EBITDA increased 3% to $102 million primarily due to revenue increases, partially offset by the impact of Hurricane Maria on the hotel in Puerto Rico.
The Destination Network no longer includes the Company's European vacation-rentals business and has been classified as a discontinued operation. Revenues at the segment were $200 million, an increase of 5% from the year-ago figure. While exchange revenues per member rose 7%, the average number of members declined 1%. The upside in exchange revenues was favored by pricing. Adjusted EBITDA increased 23% to $48 million, reflecting cost savings initiatives and favorable pricing.
Revenues at Vacation Ownership increased 4% year over year to $734 million. The uptick reflects an increase in gross VOI sales as well as higher consumer financing revenues, even though hurricanes negatively impacted VOI sales in the quarter. Gross VOI sales in the fourth quarter increased 7% from the year-ago period. Meanwhile, tour flow was up 7% and volume per guest (VPG) increased 2%. Adjusted EBITDA increased 4.7% to $200 million, as higher gross VOI sales and consumer financing revenues were offset by a higher provision for loan losses.
Operating Highlights
Net Income in the quarter totaled $449 million, higher than $164 million in the year-ago quarter. Total Expenses amounted to $1.1 billion in the quarter, up from $937 million in the prior-year quarter.
Adjusted EBITDA from continuing operations increased 5% year over year to $320 million. Results primarily reflect growth in revenues, cost containment efforts, partially offset by the hurricane impacts.
Balance Sheet
As of Dec 31, 2017, net cash from continuing operations was $880 million, compared with $846 million in the prior year. The increase is primarily due to higher net income.Total free cash flow (from continuing and discontinued operations) was $799 million in 2017, compared with $782 million in 2016.
The company repurchased 1.4 million shares of common stock for $150 million during the quarter at an average price of $110.06. In 2017, the company repurchased 6.3 million shares of stock or 6% of shares outstanding, at a cost of $601 million. In the quarter, the company's Board of Directors authorized an increase in quarterly cash dividend to 66 cents from 58 cents per share.
2017 Results
For 2017, revenues from continuing operations were $5.1 billion, reflecting 3% year-over-year growth. The upside was offset by higher year-over-year interest, depreciation and variable compensation expenses. The recent hurricanes also affected revenues. Adjusted EPS was $5.50 per share compared with $5.15 in 2016. The growth in adjusted EPS primarily reflected the repurchase of 6% of outstanding shares in the year.
2018 Guidance
Revenues are expected in the range of $5.26-$5.40 billion, reflecting an increase of 4-6%. Adjusted net income from continuing operations is expected within $702-$722 million. The company expects Adjusted EBITDA between $1.330 billion and $1.355 billion, reflecting year-over-year growth of 6-8%. Adjusted diluted EPS from continuing operations is anticipated in the range of $6.90-$7.05 and is projected to increase 25-28% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Wyndham Worldwide Corp Price and Consensus
VGM Scores
At this time, WYN has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, WYN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Wyndham Worldwide (WYN) Down 5.3% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Wyndham Worldwide Corp . Shares have lost about 5.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WYN due for a breakout? 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 drivers.
Recent Earnings
Wyndham Worldwide Corporation reported mixed fourth-quarter 2017 results wherein earnings surpassed the Zacks Consensus Estimate while revenues lagged the same.
Adjusted earnings of $1.49 per share beat the consensus estimate of $1.35 by 10.4%. Also, the bottom line was up 9.6% year over year on the back of higher revenues as well as the company’s share repurchase program, partly offset by higher interest expenses.
Net revenues from continuing operations were $1.2 billion and improved 4% from the prior-year quarter on the back of increased contribution from all its segments. However, the top line lagged the consensus estimate of $1.4 billion by 14.3%.
Fourth Quarter Unit Performances
Notably, Wyndham has been functioning through its three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals), and Vacation Ownership.
Hotel Group revenues were $332 million, up 5% from the year-ago figure, which reflected higher franchise and royalty fees, increased pass-through marketing, reservation as well as growth in Wyndham Rewards revenues. Domestic same-store RevPAR (revenues per available room) improved 4.5%. At constant currency, global system-wide same store RevPAR increased 4.6% year over year. Adjusted EBITDA increased 3% to $102 million primarily due to revenue increases, partially offset by the impact of Hurricane Maria on the hotel in Puerto Rico.
The Destination Network no longer includes the Company's European vacation-rentals business and has been classified as a discontinued operation. Revenues at the segment were $200 million, an increase of 5% from the year-ago figure. While exchange revenues per member rose 7%, the average number of members declined 1%. The upside in exchange revenues was favored by pricing. Adjusted EBITDA increased 23% to $48 million, reflecting cost savings initiatives and favorable pricing.
Revenues at Vacation Ownership increased 4% year over year to $734 million. The uptick reflects an increase in gross VOI sales as well as higher consumer financing revenues, even though hurricanes negatively impacted VOI sales in the quarter. Gross VOI sales in the fourth quarter increased 7% from the year-ago period. Meanwhile, tour flow was up 7% and volume per guest (VPG) increased 2%. Adjusted EBITDA increased 4.7% to $200 million, as higher gross VOI sales and consumer financing revenues were offset by a higher provision for loan losses.
Operating Highlights
Net Income in the quarter totaled $449 million, higher than $164 million in the year-ago quarter. Total Expenses amounted to $1.1 billion in the quarter, up from $937 million in the prior-year quarter.
Adjusted EBITDA from continuing operations increased 5% year over year to $320 million. Results primarily reflect growth in revenues, cost containment efforts, partially offset by the hurricane impacts.
Balance Sheet
As of Dec 31, 2017, net cash from continuing operations was $880 million, compared with $846 million in the prior year. The increase is primarily due to higher net income.Total free cash flow (from continuing and discontinued operations) was $799 million in 2017, compared with $782 million in 2016.
The company repurchased 1.4 million shares of common stock for $150 million during the quarter at an average price of $110.06. In 2017, the company repurchased 6.3 million shares of stock or 6% of shares outstanding, at a cost of $601 million. In the quarter, the company's Board of Directors authorized an increase in quarterly cash dividend to 66 cents from 58 cents per share.
2017 Results
For 2017, revenues from continuing operations were $5.1 billion, reflecting 3% year-over-year growth. The upside was offset by higher year-over-year interest, depreciation and variable compensation expenses. The recent hurricanes also affected revenues. Adjusted EPS was $5.50 per share compared with $5.15 in 2016. The growth in adjusted EPS primarily reflected the repurchase of 6% of outstanding shares in the year.
2018 Guidance
Revenues are expected in the range of $5.26-$5.40 billion, reflecting an increase of 4-6%. Adjusted net income from continuing operations is expected within $702-$722 million. The company expects Adjusted EBITDA between $1.330 billion and $1.355 billion, reflecting year-over-year growth of 6-8%. Adjusted diluted EPS from continuing operations is anticipated in the range of $6.90-$7.05 and is projected to increase 25-28% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Wyndham Worldwide Corp Price and Consensus
Wyndham Worldwide Corp Price and Consensus | Wyndham Worldwide Corp Quote
VGM Scores
At this time, WYN has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, WYN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.