On Feb 22, we upgraded our recommendation on
Wyndham Worldwide Corp.
) to Outperform from Neutral on the back of better-than-expected
fourth-quarter 2012 results and increased guidance for 2013.
CHOICE HTL INTL (CHH): Free Stock Analysis
INTERCONTL HTLS (IHG): Free Stock Analysis
SANDS CHINA LTD (SCHYY): Get Free Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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Why the Upgrade?
Wyndham continued its strong momentum in the fourth quarter of
2012 beating the Zacks Consensus Estimates for both earnings and
revenues. In fact the hotelier outperformed the Zacks Consensus
Estimates for both earnings and revenues in all four quarters of
Buoyed by its strong operating performance, Wyndham raised its
revenue, earnings and earnings before interest, taxes,
depreciation and amortization (EBITDA) guidance for full-year
2013. Higher revenue per available room (RevPAR) and unit growth
in its latest guidance also indicate the company's inherent
With the economy beginning to improve gradually, the company has
started to generate room-rate gains in the domestic upscale and
mid-scale segments without compromising on occupancy.
Wyndham derives a substantial chunk of revenues from its vacation
ownership or timeshare business, which has solid long-term
potential. Moreover, the company has a market leading position in
vacation rental business.
Wyndham is currently on an acquisition spree. In order to further
strengthen its existing vacation rental portfolio, Wyndham sealed
three bolt-on acquisitions -- two beach resorts in the U.S. and
one in United Kingdom in 2012. The company has acquired about 31
European rental brands since 2000.
We expect the company to benefit from its shift to a greater
fee-for-service-based business, solid free cash flow generation,
increased global travel demand and international expansion as
Other Stocks to Consider
Others players in the same industry, which look attractive at
current levels include
Sands China Ltd.
) carrying a Zacks Rank #1 (Strong Buy) and
Choice Hotel International
Intercontinental Hotels Group plc
) carrying a Zacks Rank #2 (Buy).