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Wyndham Worldwide Hits 52-Week High on Prospects of Higher Earnings

Zacks Equity Research

Shares of Wyndham Worldwide Corporation (WYN) hit a 52-week high of $77.05 on Jul 9, eventually closing at $77.05, ahead of the second quarter results later this month.

Wyndham is quite optimistic of posting strong year-over-year earnings growth in the second quarter of 2014, results of which are due to be released on Jul 24, 2014. At the first quarter earnings call, the company provided its second quarter adjusted earnings of $1.11 to $1.13, which represents a year-over-year gain of approximately 13.0% to 15.0%. The Zacks Consensus Estimate stands at $1.13, which is at the higher end of the guidance – reflecting bullish expectations for the quarter.

Moreover, the company had raised its earnings guidance for 2014 during the first quarter earnings call. The increased range of $4.23 to $4.33 marks a year-over-year increase of 10.4% to 13.0%.

We believe that the company’s efforts and initiatives to boost traffic resulted in a positive outlook. In order to survive in the tough economic environment, Wyndham has devised new ways to increase traffic, which include organizing television and digital media campaigns to increase brand awareness while driving direct bookings. Also, the company is launching new prototype hotels that aim at enhancing overall guest experience.

Moreover, the company is organizing podium presentations to effectively and efficiently introduce prospective owners to the benefits of its timeshare business that has solid long-term potential. The company expects these new tools to drive growth in the upcoming quarters.

Overall, we believe that Wyndham’s strong developmental pipeline, significant international exposure and transition to a growing fee-for-service-based business are expected to spur growth for the company.

Wyndham currently holds a Zacks Rank #2 (Buy). Other stocks in the hotel industry worth considering include Hilton Worldwide Holdings Inc. (HLT), Choice Hotels International Inc. (CHH) and Extended Stay America, Inc. (STAY). All these stocks have the same Zacks Rank as Wyndham.


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