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Extended Stay America, Inc. reported first-quarter 2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. However, both the top and the bottom lines declined on a year-over-year basis, thanks to a drop in comparable company-owned RevPAR owing to the coronavirus outbreak.
During the first quarter, adjusted earnings of 7 cents per share beat the Zacks Consensus Estimate of 4 cents by 75%. However, the bottom line declined 56.3% on a year-over-year basis. The downside can primarily be attributed to a decline in comparable system-wide RevPAR, rise in hotel operating and interest expenses, partially offset by lower income tax expenses.
Detailed Revenue Discussion
Extended Stay reported total revenues of $266.3 million in the quarter, down 4.1% from the year-ago figure of $277.7 million. The decline was primarily due the negative impact of COVID-19 on its business, mainly in the month of March.
Comparable system-wide RevPAR of $43.98 fell 5.8% on a year-over-year basis owing to a 6.5% drop in average daily rate (ADR), offset by an increase of 60 basis points (bps) in occupancy.
Meanwhile, comparable company-owned RevPAR declined 6.4% to $45.12 from the prior-year quarter.
Extended Stay America Inc Price, Consensus and EPS Surprise
In the quarter under review, Extended Stay’s hotel operating margin came in at 45.7%, reflecting a decline of 440 bps from the prior-year quarter. The decline was primarily led by a decrease in comparable system-wide RevPAR as well as an increase in hotel payroll expenses.
Adjusted EBITDA totaled $97.7 million, down 16% from the comparable year-ago period due to a decline in comparable system-wide RevPAR as well as an increase in hotel labor expenses.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2020, was $710.1 million compared with $346.8 million on Dec 31, 2019. At the end of the first quarter, total debt (net of unamortized deferred financing costs and debt discounts) amounted to $3,039.8 million, up from $2,639.8 million at 2019-end.
Extended Stay’s capital expenditures in the quarter under review came in at $54.6 million. The company repurchased 2.2 million Paired Shares during the reported quarter for an aggregate purchase of $31 million. At the end of the first quarter, total shares remaining under its share repurchase authorization were approximately $101.1 million. The company doesn’t plan to repurchase any additional Paired Shares in the foreseeable future.
2020 Outlook
Due to the coronavirus pandemic, the company has not provided any update on 2020 guidance. For 2020, the company expects depreciation and amortization in the range of $190 to $195 million, net interest expenses between $135 million and $145 million, and capital expenditures between $160 million and $190 million.
Vista Outdoor has a trailing four-quarter positive earnings surprise of 23.1%, on average. The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters.
Earnings in 2021 for JAKKS Pacific are expected to surge 39.4%.
K12 has a three-five year earnings per share growth rate of 15%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Extended Stay (STAY) Q1 Earnings Beat Estimates, Decline Y/Y
Extended Stay America, Inc. reported first-quarter 2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. However, both the top and the bottom lines declined on a year-over-year basis, thanks to a drop in comparable company-owned RevPAR owing to the coronavirus outbreak.
During the first quarter, adjusted earnings of 7 cents per share beat the Zacks Consensus Estimate of 4 cents by 75%. However, the bottom line declined 56.3% on a year-over-year basis. The downside can primarily be attributed to a decline in comparable system-wide RevPAR, rise in hotel operating and interest expenses, partially offset by lower income tax expenses.
Detailed Revenue Discussion
Extended Stay reported total revenues of $266.3 million in the quarter, down 4.1% from the year-ago figure of $277.7 million. The decline was primarily due the negative impact of COVID-19 on its business, mainly in the month of March.
Comparable system-wide RevPAR of $43.98 fell 5.8% on a year-over-year basis owing to a 6.5% drop in average daily rate (ADR), offset by an increase of 60 basis points (bps) in occupancy.
Meanwhile, comparable company-owned RevPAR declined 6.4% to $45.12 from the prior-year quarter.
Extended Stay America Inc Price, Consensus and EPS Surprise
Extended Stay America Inc price-consensus-eps-surprise-chart | Extended Stay America Inc Quote
Operating Highlights
In the quarter under review, Extended Stay’s hotel operating margin came in at 45.7%, reflecting a decline of 440 bps from the prior-year quarter. The decline was primarily led by a decrease in comparable system-wide RevPAR as well as an increase in hotel payroll expenses.
Adjusted EBITDA totaled $97.7 million, down 16% from the comparable year-ago period due to a decline in comparable system-wide RevPAR as well as an increase in hotel labor expenses.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2020, was $710.1 million compared with $346.8 million on Dec 31, 2019. At the end of the first quarter, total debt (net of unamortized deferred financing costs and debt discounts) amounted to $3,039.8 million, up from $2,639.8 million at 2019-end.
Extended Stay’s capital expenditures in the quarter under review came in at $54.6 million. The company repurchased 2.2 million Paired Shares during the reported quarter for an aggregate purchase of $31 million. At the end of the first quarter, total shares remaining under its share repurchase authorization were approximately $101.1 million. The company doesn’t plan to repurchase any additional Paired Shares in the foreseeable future.
2020 Outlook
Due to the coronavirus pandemic, the company has not provided any update on 2020 guidance. For 2020, the company expects depreciation and amortization in the range of $190 to $195 million, net interest expenses between $135 million and $145 million, and capital expenditures between $160 million and $190 million.
Zacks Rank & Key Picks
Extended Stay currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector include Vista Outdoor Inc (VSTO - Free Report) , JAKKS Pacific Inc (JAKK - Free Report) and K12 Inc (LRN - Free Report) , each sporting a Zacks Rank #1.
Vista Outdoor has a trailing four-quarter positive earnings surprise of 23.1%, on average. The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters.
Earnings in 2021 for JAKKS Pacific are expected to surge 39.4%.
K12 has a three-five year earnings per share growth rate of 15%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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