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What Should You Expect From Wyndham (WYN) in Q3 Earnings?

Wyndham Worldwide CorporationWYN is scheduled to report third-quarter 2017 numbers on Oct 23, before market opens.

We expect the company's diversified product portfolio, prudent acquisitions and robust marketing efforts to continue driving the bottom line in the quarter.

In fact, in December 2016, the company's Hotel Group acquired Latin America's leading Fen Hotels while the company's Vacation Rentals entered into a strategic partnership with Unique Ventures (Veeve). Both these deals are expected to boost sales considerably as they add to the company's international presence.

Meanwhile, increasing business and leisure travel on the back of an improving domestic economy and positive employment numbers are anticipated to boost the quarter's results.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at $2.01, reflecting an increase of 6.1% over the prior-year quarter. Also, the quarter's revenues are expected to grow 6% year over year to $1.67 billion.

Wyndham Worldwide Corp Price, Consensus and EPS Surprise

Wyndham Worldwide Corp Price, Consensus and EPS Surprise | Wyndham Worldwide Corp Quote

Segment Contribution

Wyndham's robust vacation ownership or timeshare business is one of the fastest evolving and profitable sectors in the hospitality industry. Banking on its new sales centers, strong affiliation agreements and improved sales and marketing operations, the company expects to generate substantial sales in its vacation ownership business.

Thus, the Zacks Consensus Estimate for net revenues in this segment is currently pegged at $791 million, reflecting an increase of more than 6% year over year.

Notably, the company is focused on increasing the number of new owners in vacation ownership segment. Although crucial to the long-term health of the business, this move is expected to weigh on the company's near-term EBITDA. Hence, the Zacks Consensus Estimate for EBITDA in this segment is currently pegged at $192 million, reflecting a modest rise of less than 2% year over year.

Meanwhile, Wyndham's Destination Network business continues to witness strong growth from its Vacation Rental brands with healthy increases in organic unit count, occupancy and price. Performance is expected to continue to be strong in Europe, where the company has been investing heavily in recruiting, services and improving guest experience to drive growth. The Zacks Consensus Estimate for net revenues in this segment is currently pegged at $515 million, reflecting a rise of 6% year over year.

Further, given the solid expansion efforts and improving economic indicators leading to robust demand, Wyndham Hotel Group is expected to post strong revenue growth in the to-be-reported quarter. The Zacks Consensus Estimate for net revenues in this segment is currently pegged at $380 million, reflecting an improvement of 4% year over year.

Other Factors

Also contributing to the solid revenue growth expectations are Wyndham's string of initiatives to boost occupancy as well as its strong loyalty program.

However, certain headwinds persist in the form of lingering uncertainty in various economies like Brazil and Africa that might limit revenue growth, soft demand in oil producing regions that could hurt revenue per available room (RevPAR) in the third quarter and consumer concerns related to pandemic virus like Zika that may somewhat temper growth in the Caribbean region.

Also, given Wyndham's considerable international operations, negative currency translation might continue hampering the company's results as it has been doing over the last few quarters.

Taking into account the headwinds, our quantitative model predicts that Wyndham does not have the right combination of two main ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher - for increasing the odds of an earnings beat.

Zacks ESP: Wyndham has an Earnings ESP of -0.75%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Wyndham carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks in the same space, which, as per our model, have the right combination of elements to post an earnings beat this quarter.

Hilton Worldwide Holdings, Inc. HLT has an Earnings ESP of +0.80% and a Zacks Rank #2 (Buy).

Choice Hotels International, Inc. CHH has an Earnings ESP of +1.26% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Hyatt Hotels Corporation H has an Earnings ESP of +5.26% and a Zacks Rank #3.

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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.


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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