Wyndham Worldwide Corporation
) hit a 52-week high of $79.24 on Aug 13. The company's share price
has continued to gain momentum since it reported solid second
quarter 2014 results and increased its outlook for 2014 on Jul 24.
The company's closing price of $78.83 reflects a year-to-date
return of over 8.3%.
Wyndham Worldwide's second-quarter adjusted earnings of $1.17 per
share beat the Zacks Consensus Estimate by 3.5% and increased 19.4%
year over year led by strong performance by the company's Lodging
as well as Vacation Ownership businesses. Also, share repurchase
activities drove the earnings. 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% aided by quarterly sales.
Systemwide RevPAR grew 5.6% year over year on the back of an 8.8%
domestic increase, partially offset by a 4.3% decline in
international RevPAR due to unfavorable currency movements. The
upside reflects an increase in global business travel that drove
occupancy and room rates.
Going forward, U.S. hotel demand is expected to exceed supply in
2014, thereby leaving scope for the company to raise its room rate.
Given the scenario, the company raised its earnings guidance for
2014 and expects it in the range of $4.34-$4.44 per share, up from
$4.23-$4.33 guided earlier. Also, adjusted EBITDA guidance range
was raised to $1.230-$1.245 billion from $1.215-$1.240 billion
expected earlier. We note that estimates for 2014 and 2015 have
largely moved upwards over the past 30 days.
We believe that Wyndham's efforts and initiatives to boost traffic
have resulted in positive outlook for the company. In order to
survive in the tough economic environment, Wyndham has devised new
ways to increase traffic, which include organizing television and
digital media campaigns to increase brand awareness while driving
direct bookings. Also, the company is launching new prototype
hotels that aim at enhancing the overall guest experience.
Overall, we believe strong developmental pipeline, significant
international exposure and its transition to a growing
fee-for-service-based business are expected to spur growth for this
Zacks Rank #2 (Buy) stock.
Other stocks in the hotel industry worth considering include The
Marcus Corporation (
), Marriott Vacations Worldwide Corp. (
) and Choice Hotels International Inc. (
). While Marcus Corporation sports a Zacks Rank #1 (Strong Buy),
Marriott Vacations Worldwide and Choice Hotels International carry
a Zacks Rank #2.
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WYNDHAM WORLDWD (WYN): Free Stock Analysis
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