Leading hospitality company,
Wyndham Worldwide Corporation
), second-quarter adjusted earnings of $1.17 per share beat the
Zacks Consensus Estimate of $1.13 by 3.5% which, we believe, was
due to better-than-expected revenues.
Further, quarterly earnings were up 19.4% year over year led by
strong performance by the company's Lodging as well as Vacation
Ownership businesses and share repurchase activities.
Wyndham Worldwide Corporation - Earnings
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Net revenue grew 7.2% year over year to $1.34 billion in the
quarter, beating the Zacks Consensus Estimate of $1.33 billion by
0.8%. 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 8.0% year over year to
$283.0 million in the quarter, driven by 8.8% rise in domestic
revenue per available room (RevPAR).
Systemwide RevPAR grew 5.6% in the quarter. The increase reflects
an 8.8% domestic increase, partially offset by 4.3% decline in
international RevPAR, which primarily reflects unfavorable currency
Adjusted EBITDA for the second quarter of 2014 was $87 million, a
12% increase from the prior-year quarter, primarily due to higher
Revenues from the Vacation Exchange and Rentals segment were up
7.0% year over year to $402.0 million. However, in constant
currency, segment revenues increased 3%.
Vacation rental revenues went up 17.0% year over year to $217.0
million, while Exchange revenues remained stable year over year at
$168 million. Excluding the impact of foreign currency and
acquisitions, Vacation Rental revenues were up 6.0%, due to 4.9%
increase in transaction volume and 1.2% rise in the average net
price per vacation rental. Exchange revenues remained flat as 1.7%
increase in average number of members was offset by 1.8% decline in
exchange revenue per member.
Revenues from the Vacation Ownership segment rose 7.0% year over
year to $673.0 million, driven by higher gross Vacation Ownership
Interest (VOI) sales and a lower loan loss provision. Gross VOI
sales were up 3% year over year to $496.0 million, gaining from
1.0% rise in tour flow and 1.1% increment in volume per guest along
with a rise in tele-sales upgrades.
Adjusted EBITDA grew 15.0% year over year to $185 million during
the quarter, buoyed by increased revenues.
Wyndham has bought back approximately 2.3 million shares for $170
million during the second quarter of 2014. From Jul 1 through Jul
23, 2014, the company repurchased an additional 0.5 million shares
for $37 million. The company's remaining share repurchase
authorization is worth $311 million as of Jul 23, 2014.
Guidance for 2014
Wyndham maintained its revenue guidance for 2014. The company
expects revenues within $5.250-$5.350 billion. However, the company
has raised its adjusted EBITDA guidance. Adjusted EBITDA is
expected to be within $1.230-$1.245 billion, up from $1.215-$1.240
billion expected earlier.
The company has raised its earnings guidance for 2014. The company
now anticipates adjusted earnings per share within the range of
$4.34-$4.44, up from $4.23-$4.33. The Zacks Consensus Estimate for
2014 stands at $4.34.
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 about 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 headwinds.
Wyndham currently has a Zacks Rank #2 (Buy). Some well-performing
stocks in the same sector include
Extended Stay America, Inc.
Starwood Hotels & Resorts Worldwide Inc.
Hilton Worldwide Holdings Inc.
). All these stocks have the same Zacks Rank as Wyndham.
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