Choice Hotels International Inc. (
reported third quarter 2012 earnings per share of 76 cents,
substantially beating the Zacks consensus Estimate of 62 cents.
Moreover, the earnings were 7% higher than the year-ago level of
Total revenue came in at $210.4 million, up 9.0% year over year.
Also, revenue significantly surpassed the Zacks Consensus
Estimate of $202.0 million. The increase was mainly attributable
to increase in franchising revenue and domestic system-wide
revenue per available room (RevPAR) and occupancy hike.
During the reported quarter, franchising revenue stood at $90.1
million, up 4% year over year. System-wide domestic hotels
revenue per available room (RevPAR) increased 5.6% to $51.09 on a
year-over-year basis, mainly driven by a continuous improvement
in occupancy and brand pricing growth. Occupancy increased 180
bps (basis points) to 65.0% and Average Daily Rate upped 2.7%
year over year to $78.63.
Operating income of the company expanded 5% to $62.4 million,
while EBITDA (Earnings before interest, taxes, depreciation and
amortization) surged 4% to 67.3 million.
During the quarter, Choice Hotels signed 89 new domestic hotel
franchise contracts, which marked an increase of 13% year over
year. As of September 30, 2012, the company has 435 hotels,
comprising 36,150 rooms currently under development, awaiting
conversion or approved for development.
At the end of the quarter, Choice Hotels has approximately 6,200
franchised hotels with over 495,000 rooms across the United
States and more than 30 other countries and territories
Choice Hotels ended the third quarter with cash and cash
equivalents of $115.1 million and gross debt of $819.0 million.
For the fourth quarter 2012, the company expects earnings per
share to be at least 40 cents and RevPAR to increase around 4%.
For 2012, Choice Hotels predicts earnings per share to be in the
range of $2.05 - $2.07 and EBITDA in the range of
$201 million - $202.5 million. RevPAR is anticipated to increase
in the range of 6% - 6.5% for 2012.
Despite a challenging economic environment, Choice Hotels'
achievement of 7% growth in earnings, increase in RevPAR and
occupancy levels depicts the strength in the company's
Moreover, we expect the company to further benefit from
investment in programs designed to drive customer traffic,
improve guest loyalty and brand value. Based on strong third
quarter results, we expect the estimates to go up in the coming
One of the company's peers,
Wyndham Worldwide Corporation (
announced third quarter 2012 adjusted earnings of $1.13 per share
surpassing the Zacks Consensus Estimate and year-ago quarter
adjusted earnings by 20%.
Choice Hotels currently carries a Zacks #2 Rank, which translates
into a short-term Buy rating. We are also maintaining our
long-term Neutral recommendation on the stock.
CHOICE HTL INTL (CHH): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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