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Wyndham Tops Q4 Earnings, Lags Revenues; Offers 2017 View

Zacks

Wyndham Worldwide Corporation WYN posted mixed results for the fourth quarter of 2016, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.

Earnings and Revenues Discussion

Adjusted earnings of $1.35 per share beat the Zacks Consensus Estimate of $1.30 by 3.8%. Also, earnings were up 37.8% year over year on the back of growth across all of its businesses and share repurchase program.

Additionally, net revenues of $1.32 billion improved 0.7% year over year on the back of increased contribution from the hotel group and the destination network segments. Revenues, however, slightly missed the Zacks Consensus Estimate of $1.33 billion by 0.6%.

Inside the Headline Numbers

Adjusted EBITDA (excluding share-based compensation expense) grew 16.5% year over year to $318 million.

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

Hotel Group revenues were $316 million, up 0.6% from the year-ago figure, which reflected higher franchise fees as well as growth in the company's Wyndham Rewards credit card program. The rise was partially offset by lower reimbursable property management revenues.

Domestic same store RevPAR inched up 2.9%. At constant currency, total system-wide same store RevPAR increased 2.7% year over year, reflecting softness in the U.S. and Canadian oil markets.

Adjusted EBITDA increased 6% to $99 million. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA grew 8%. This reflects higher franchise fees and growth in the company’s Wyndham Rewards credit card program.

Revenues at Destination Network were $317 million, an increase of 2.3% from the year-ago figure. Meanwhile, at constant currency and excluding acquisitions, revenues recorded an improvement of 3%.

Exchange revenues fell 0.7% to $145 million. Nonetheless, the figure grew 1% at constant currency, as the average number of members inched up 0.2% and exchange revenue per member rose 0.4%.

Vacation rental revenues were $151 million, reflecting 4.9% year-over-year growth. Likewise, at constant currency and excluding acquisitions, vacation rental revenues inched up 5% driven by a 5.3% increase in transaction volumes. Meanwhile, average net price per vacation rental remained flat.

Adjusted EBITDA increased 9% to $52 million on the back of revenue gains from continued strong vacation rental performance and lower costs.

Revenues at Vacation Ownership declined 0.1% year over year to $705 million.

Gross VOI sales in the fourth quarter remained flat, given sales office closures from restructuring and Hurricane Matthew. Number of new owners added during the quarter was up 8% year over year. Meanwhile, volume per guest (VPG) was up 0.4% and tour flow declined 1.5% in the quarter.

Adjusted EBITDA increased 10% to $191 million on the back of lower costs.

The company also declared that its board of directors has authorized a 16% increase in the quarterly cash dividend to 58 cents from 50 cents per share. The hike will be effective from the first quarter of 2017.

2016 Results

Wyndham’s full-year adjusted earnings of $5.75 topped the Zacks Consensus Estimate of $5.70 by 0.9%. Moreover, it increased 12.5% from the year-ago quarter figure of $5.11.

Full-year revenues of $5.60 billion slightly missed the Zacks Consensus Estimate of $5.62 billion by 0.4%, but inched up 1.1% year over year.

Wyndham Worldwide Corp Price, Consensus and EPS Surprise


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

2017 Guidance

For 2017, the company projects adjusted net income in a range of $637–$658 million. In the meantime, adjusted earnings per share are anticipated in a band of $5.90 to $6.10 per share. The Zacks Consensus Estimate for 2017 earnings is currently pegged at $6.25 per share.

Wyndham expects full-year revenues to roughly come in a range of $5.80–$5.95 billion. Adjusted EBITDA is also projected to be approximately in a band of $1.41 billion to $1.44 billion.

Zacks Rank & Stocks to Consider

Wyndham has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Intrawest Resorts Holdings, Inc. SNOW, Belmond Ltd. BEL and Choice Hotels International, Inc. CHH. While Intrawest Resorts Holdings sports a Zacks Rank #1 (Strong Buy), Belmond and Choice Hotels International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Intrawest Resorts Holdings’ fiscal 2017 earnings climbed nearly 26% over the past 60 days. Moreover, the trailing four-quarter average earnings surprise is a positive 8.71%.

Belmond posted positive earnings surprises in three of the last four quarters, with an average beat of 108.63%. Additionally, for 2016, EPS is expected to improve 66.7%.

Choice Hotels International’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 2.67%. Further, for 2016, EPS is expected to grow 9.9%.

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