Wyndham Worldwide Corporation
) is a leading hospitality company with an impressive earnings
surprise history and a share price hovering close to a 52-week
high. Shares of this Zacks #1 Rank (Strong Buy) have gained
approximately 39.5% so far this year.
A strong customer base, renowned brands and fee-for-service
business model are positives for this stock, making it resilient to
the challenging environment. The strength was well reflected
through its first-quarter 2012 results, which included
year-over-year EPS growth of 36% and a positive surprise of 9.1%
over the Zacks Consensus Estimate.
An Upbeat Quarter and Better Guidance
On April 25, Wyndham Worldwide Corporation posted first-quarter
2012 earnings of 60 cents per share, surpassing the Zacks Consensus
Estimate of 55 cents and the prior-year earnings of 44 cents.
Strength in Vacation Ownership and the Hotel businesses benefited
Net sales of $1,036 million comfortably surpassed the Zacks
Consensus Estimate of $1,008 million and grew 9% year over year,
mirroring sales increases across Lodging (up 24%), Vacation
Ownership (up 11%) and Vacation Exchange and Rentals (up 1.4%).
The better-than-expected results prompted management to raise its
2012 earnings per share guidance to the range of $3.00 to $3.15,
compared to the earlier outlook of $2.85 to $3.00. However, the
company reiterated its revenue projection of $4.425 billion to $4.6
The company's strong free cash flow generation and optimum capital
allocation approach have helped it to enhance shareholders' returns
from time to time via dividend and share repurchase activities. The
company bought back approximately 3.6 million shares for $150
million during the quarter, and increased its share repurchase
authorization by $750 million to $940 million. The company last
hiked its quarterly dividend in the fourth-quarter 2011 by 53% to
23 cents per share.
Earnings Estimate Revisions
Over the last 60 days, the Zacks Consensus Estimate for 2012
increased 6.4% to $3.16, while the 2013 guidance has ascended 4.1%
to $3.55. The 2012 estimate is a penny above the high-end of the
company's guidance range, and implies year-over-year growth of
26.9%.The 2013 Estimate reflects an increase of 12.3%.
Wyndham Worldwide Corporation currently trades at a forward P/E of
16.4x, reflecting a 26.1% discount to the peer group average of
22.2x. With respect to return on equity (ROE), the stock also looks
attractive. It has a trailing 12-month ROE of 18.1%, which is above
its peer group average of 15.1%. This implies that the company
reinvests its earnings more efficiently than its peer group.
However, on a price-to-book basis, shares trade at 3.6x, a 47.1%
premium to the peer group average of 2.4x. Given the company's
compelling fundamentals, the premium valuation is justified and
well supported by the long-term estimated EPS growth rate of 20%
versus 16.7% for the peer group.
Chart Revealing Strength
Since the beginning of the year, shares of Wyndham Worldwide
Corporation have been moving upward with minor lapses, and is now
trading close to its 52-week high of $52.17. The stock has been
consistently trading above its 200-day moving average since October
26, 2011. It has also remained above the 50-day moving average
since June 6, 2012.
Volume is fairly strong, averaging roughly 2,130K daily. Wyndham
Worldwide Corporation, which competes with Marriott International,
), has outperformed the S&P 500 since January 19, 2012. The
year-to-date return for the stock is 39.5% compared with the
S&P 500's return of 6.9%.
Headquartered in Parsippany, New Jersey, Wyndham Worldwide
Corporation offers different hospitality products and services to
individual customers and business clients in the United States and
worldwide under brands, Wyndham Hotel Group, Wyndham Exchange &
Rentals and Wyndham Vacation Ownership. The company has a current
market cap of $7.55 billion.
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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