Leading hospitality company,
Wyndham Worldwide Corporation
), first-quarter adjusted earnings of 78 cents per share beat the
Zacks Consensus Estimate of 75 cents by 4.0% which, we believe,
was due to better-than-expected revenues.
Further, quarterly earnings were up 9.9% year over year led by
strong performance by the company's Lodging as well as Vacation
Ownership businesses and share repurchase activities.
Net revenue grew 5.6% year over year to $1.21 billion in the
quarter, beating the Zacks Consensus Estimate of $1.19 billion by
1.7%. Solid revenue growth in all the three operating segments
aided quarterly sales.
Inside the Headline Numbers
Wyndham has three operating segments - Lodging, Vacation Exchange
and Rentals and Vacation Ownership. All the segments have both
domestic and international operations.
Wyndham's Lodging segment revenues grew 6.8% year over year to
$237.0 million in the quarter, driven by a 7.6% rise in domestic
revenue per available room (RevPAR), higher franchise fees and
earnings before interest, taxes, depreciation and amortization
(EBITDA)-neutral hotel management reimbursable fees.
Systemwide RevPAR grew 4.0% in the quarter. The increase reflects
a 7.6% domestic increase, partially offset by a 4.3% decline in
international RevPAR, primarily reflecting unfavorable currency
Revenues from the Vacation Exchange and Rentals segment were up
1% year over year to $379.0 million. However, in constant
currency, segment revenues remained flat.
Vacation rental revenues went up 6.0% year over year to $176.0
million, while Exchange revenues were down 3% to $187.0 million.
In constant currency, exchange revenues declined 2.0% year over
year because a 1.6% improvement in average number of members was
neutralized by a 3.7% drop in exchange revenue per member.
Revenues from the Vacation Ownership segment rose 8.0% year over
year to $593.0 million, driven by higher gross Vacation Ownership
Interest (VOI) sales and a lower loan loss provision. Gross VOI
sales were up 7% year over year to $410 million, gaining from a
4.3% rise in tour flow and 2.8% increment in volume per guest.
Adjusted EBITDA grew 2.0% year over year to $115 million during
the quarter, buoyed by increased revenues.
Wyndham has bought back approximately 2.1 million shares for $150
million during the first quarter of 2014. From Apr 1
through Apr 23, 2014, the company repurchased an additional 0.6
million shares for $42 million. The company's remaining share
repurchase authorization is worth $476 million as of Apr 23,
Guidance for 2014
Wyndham maintained its revenue and EBITDA guidance for 2014. It
expects revenues within $5.250-$5.350 billion while adjusted
EBITDA is expected in the $1.215 to $1.240 billion range.
The company has raised its earnings guidance for 2014. The
company now anticipates adjusted earnings per share within the
range of $4.23-$4.33, up from the prior range of $4.18-$4.28. The
Zacks Consensus Estimate for 2014 stands at $4.31.
Overall, Wyndham's strong developmental pipeline, significant
international exposure and transition to a growing
fee-for-service-based business are expected to spur growth.
Shareholder-friendly steps, such as dividend hike, also inspire
optimism regarding the stock. However, excessive exposure to the
European economy and slowdown in business momentum owing to
decline in consumer spending in North America may act as
Wyndham currently carries a Zacks Rank #4 (Sell).
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WYNDHAM WORLDWD (WYN): Free Stock Analysis
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Among other hoteliers,
Marriott International, Inc.
) is slated to report first-quarter 2013 earnings on Apr 29,
Hyatt Hotels Corp.
) is slated to report earnings on Apr 30. Another hotelier,
Intercontinental Hotels Group plc
) is scheduled to report earnings on May 20.