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Wyndham Lags Q4 Earnings, Revenues Top on Solid RevPAR

Wyndham Worldwide CorporationWYN posted mixed fourth-quarter 2015 results with earnings narrowly missing the Zacks Consensus Estimate, but revenues outperforming the same.

Earnings and Revenue Discussion

Adjusted earnings of 98 cents per share missed the Zacks Consensus Estimate of 99 cents by 1%. However, earnings were up 9% year over year, reflecting an increase in revenues and lower share count.

Net revenue of $1.31 billion grew 6% year over year, driven by increased revenues at the hotel group and the vacation ownership segments. Revenues also beat the Zacks Consensus Estimate of $1.29 billion by 1.6%.

Inside the Headline Numbers

Adjusted EBITDA increased 8% year over year to $273 million. Adjusted EBITDA was negatively affected by foreign currency effects of $8 million. In constant currency, it grew 8% year over year.

Wyndham has three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals) and Vacation Ownership.

Wyndham's Hotel Group segment revenues grew 18% year over year to $314 million in the quarter. On a constant currency basis, excluding acquisitions and the impact of the increase in the inter-segment licensing fee rate, revenues increased 6%.

Domestic RevPAR increased 2.9%. In constant currency, total system-wide RevPAR was flat year over year, reflecting higher unit growth in lower RevPAR countries like China.

Adjusted EBITDA was $93 million, up 18% year over year. On a constant currency basis, excluding acquisitions and the impact of the increase in the inter-segment licensing fee rate, adjusted EBITDA increased 10%. Higher EBITDA was primarily the result of higher royalty and management fees and growth in the Wyndham Rewards credit card program.

Revenues from the Destination Network segment remained almost flat year over year at $310.0 million. However, in constant currency and excluding acquisitions and the impact of a divestiture in 2014, revenues increased 5%.

Exchange revenues fell 3% year over year to $146 million. However, it was up 1% in constant currency, which reflected 0.7% increase in average number of members.

Vacation rental revenues were $144 million, flat year over year. In constant currency and excluding acquisitions and the impact of a divestiture in 2014, vacation rental revenues were up 8% driven by 8.1% increase in transaction volume, while average net price per vacation rental remained flat.

Adjusted EBITDA increased 10% year over year to $ 43 million. On a currency-neutral basis and excluding acquisitions and the divestiture of a business in 2014, adjusted EBITDA grew 9% year over year.

Revenues from the Vacation Ownership segment rose 6% year over year to $706 million. Also, it increased 7% from the year-ago tally in constant currency.

Gross VOI sales (including currency impact) increased 8% to $507 million reflecting higher volume per guest. Gross VOI sales went up 9% on a constant currency basis. Volume per guest (VPG) for the quarter grew 3.4% in constant currency and tour flow increased 4.7%.

Adjusted EBITDA (including currency impact) grew 1% to $174 million. Meanwhile, on a currency neutral basis and excluding the impact of higher inter-segment licensing fee rate, it grew 5%, mainly supported by higher sales volume.

2015 Results

For 2015, earnings were $5.11 per share, up 13% from the prior year.

Revenues were $5.54 billion, up 5% year over year.

Dividend Hiked; Share Repurchase Authorization Increased

Subsequent with the earnings release, Wyndham's board of directors authorized a 19% increase in the quarterly dividend to 50 cents per share.

The company also approved a $1 billion increase in its share repurchase authorization.

2016 Guidance

Wyndham expects adjusted EPS in the range of $5.46-$5.60. The Zacks Consensus Estimate is pegged higher at $5.62. Revenues are expected to range within $5.80 billion to $5.95 billion.

Adjusted EBITDA is expected in the band of $1.375-$1.400 billion.

Wyndham currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the hotel industry are China Lodging Group, Limited HTHT , Intrawest Resorts Holdings, Inc. SNOW and Marriott Vacations Worldwide Corp. VAC . All these stocks carry a Zacks Rank #2 (Buy).

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WYNDHAM WORLDWD (WYN): Free Stock Analysis Report

CHINA LODGING (HTHT): Free Stock Analysis Report

INTRAWEST RESRT (SNOW): Free Stock Analysis Report

MARRIOT VAC WW (VAC): 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.


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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