Wyndham (WYN) Beats on Q4 Earnings, Raises 2015 View - Analyst Blog
Leading hospitality company, Wyndham Worldwide Corporation (WYN) posted modest fourth-quarter results. Not only did the company increase its earnings and revenue guidance for 2015 but also increased its quarterly dividend by 20%.
Adjusted earnings of 90 cents per share beat the Zacks Consensus Estimate of 86 cents by 4.7%. Also, earnings were up 23% year over year. The upside reflects year-over-year increase in revenues, decline in interest expense and lower share count.
Wyndham Worldwide Corporation - Earnings Surprise | FindTheBest
Net revenue grew 3% year over year to $1.231 billion in the quarter owing to revenue growth in all the three operating segments. However, it was approximately in line with the Zacks Consensus Estimate of $1.235 billion.
Inside the Headline Numbers
Adjusted EBITDA increased 5.4% year over year to $252.0 million.
Wyndham has three operating segments — Lodging, Vacation Exchange and Rentals and Vacation Ownership. All the segments have both domestic and international operations.
Wyndham’s Lodging segment revenues grew 9% year over year to $267 million in the quarter, driven by a rise in revenue per available room (RevPAR).
Systemwide RevPAR grew 3% in the quarter. The increase reflects an 8.6% domestic increase, partially offset by a 7.8% decline in international RevPAR due to unfavorable currency movements. Adjusted EBITDA was $79 million, up 23% year over year, owing to an increase in revenues.
Revenues from the Vacation Exchange and Rentals segment were up 2% year over year to $311.0 million. In constant currency, segment revenues increased 6%.
Vacation rental revenues went up 4% year over year to $144.0 million. Exchange revenues of $150.0 million were flat year over year. EBITDA was $39.0 million, up 8% year over year.
Revenues from the Vacation Ownership segment rose 2% year over year to $668.0 million, driven by higher resort management fees. Volume per guest (VPG) declined primarily due to a decline in the percentage of tour flow. EBITDA was $172.0 million, flat year over year.
Full-Year Results
Earnings of $4.53 per share in 2014 were up 18% year over year and also beat the Zacks Consensus Estimate of $4.48 by 1.1%. Revenues in 2014 were $5.281 billion, up 5.4% year over year. However, it was approximately in line with the consensus mark of $5.286 billion.
Top and Bottom Line Guidance for 2015 Raised
Wyndham has raised its earnings and revenue guidance for 2015. The company now anticipates adjusted earnings per share within the range of $4.75 - $4.90 compared with the prior expectation of $4.70 - $4.85 per share. The Zacks Consensus Estimate is currently pegged at $4.85 per share.
The company expects revenues in the range of $5.450 - $5.550 billion, compared to the previous expectation of $5.40 to $5.50 billion.
However, the company lowered its adjusted EBITDA guidance and expects it in the range of $1.285 - $1.315 billion. The company had earlier expected EBITDA of $1.300 - $1.330 billion. The lowered guidance reflects the adverse impact of foreign exchange.
Our Take
Wyndham’s strong developmental pipeline, significant international exposure and transition to a growing fee-for-service based business are expected to spur growth. Shareholder-friendly steps, such as dividend hike and share buybacks also inspire optimism around the stock. However, excessive exposure to the sluggish European economy and political instability in some of its operating regions act as headwinds.
Wyndham currently has a Zacks Rank #3 (Hold). Some better ranked stocks in the same industry are Choice Hotels International Inc. (CHH), Marriott Vacations Worldwide Corp. (VAC), and Intercontinental Hotels Group plc (IHG). While Choice Hotels International sports a Zacks Rank #1 (Strong Buy), Marriott Vacations Worldwide and Intercontinental Hotels Group carry a Zacks Rank #2 (Buy).
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