Wyndham's EPS Beats, Dividend Upped - Analyst Blog


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Wyndham Worldwide Corporation 's ( WYN ) fourth quarter 2011 adjusted earnings of 47 cents per share surpassed the Zacks Consensus Estimate of 43 cents and improved by a cent from the year ago quarter. In full-fiscal 2011, earnings per share were $2.49 versus $2.00 in the year-ago period.

On a reported basis, Wyndham delivered earnings of 37 cents per share versus 43 cents in the prior-year quarter. In full-fiscal 2011, earnings were $2.51 versus $2.05 in the year-ago period.

The increase was mainly driven by higher revenue per available room (RevPAR) in the Lodging business as well as strong operational performance of Vacation Ownership businesses and incremental contributions from acquisitions at its Vacation Exchange and Rentals business. Share repurchase program also aided the earnings growth.

Net revenue increased 7% year over year to $1,000 million in the reported quarter, reflecting a modest adjusted sales momentum across Wyndham's three business units and substantial contributions from acquisitions. The quarterly revenue missed the Zacks Consensus Estimate of $1,004 million. In full-fiscal 2011, revenue grew 10% year over year to $4,254.0 million.

Inside the Headline Numbers

The company's Lodging segment reported revenue of $188.0 million for the quarter, up 15% year over year, driven by a 5.0% rise in RevPAR, market share gain and a gain on reclassification of certain reservation fees.

Revenues from the Vacation Exchange and Rentals segment climbed 3% year over year to $291.0 million. However, in constant currency, excluding the impact of acquisitions, segment revenues were flat. Vacation rental revenues were $125.0 million, up 10% and Exchange revenues were $150.0 million, a decrease of 2% year over year.

Revenues from Vacation Ownership segment at Wyndham upped 6.0% to $527 million on the back of an increase in gross Vacation Ownership Interest sales and commissions under the Wyndham Asset Affiliation Model.

Hotel Update

At the end of 2011, Wyndham had approximately 7,205 properties or 613,100 rooms. The development pipeline included over 850 hotels and around 111,900 rooms, of which 57% were newly constructed and 60% were international.


Wyndham exited the year 2011 with cash and cash equivalents of approximately $140 million. Securitized vacation ownership debt was $1.9 billion.

During the quarter, the company repurchased approximately 6.7 million shares of its common stock at an average price of $33.78 per share.

Wyndham also hiked its quarterly dividend by 53% to 23 cents, thus bringing the annualized dividend to 92 cents compared with the previous payout of 60 cents per share.


For full-year 2012, management continues to expect revenue in the range of $4.4-$4.6 million and adjusted EBITDA between $1.03 billion and $1.06 billion. However, Wyndham raised its earnings per share guidance range from $2.72-$2.82 to $2.85-$3.00.

Our Take

We expect Wyndham to benefit from its repositioning to a more fee-for-service-based business, free cash flow generation and a series of acquisitions including James Villa Holidays and ResortQuest, and thus remain optimistic on the stock.

Moreover, the company is strengthening its presence in Europe and Latin America as well as Asian markets like China and India. The continued increase in earnings guidance and hike in dividend depicts the strength in the company's fundamentals.

One of Wyndham's competitors Starwood Hotels & Resorts Worldwide Inc. ( HOT ) reported fourth-quarter 2011 adjusted earnings from continuing operations of 71 cents, which surpassed the Zacks Consensus Estimate of 57 cents as well as the year-ago level of 52 cents.

Wyndham, which competes with Marriott International Inc. ( MAR ), currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are maintaining our long-term Neutral recommendation on the stock.

STARWOOD HOTELS ( HOT ): Free Stock Analysis Report
MARRIOTT INTL-A ( MAR ): Free Stock Analysis Report
WYNDHAM WORLDWD ( WYN ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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