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Wyndham (WYN) to Report Q4 Earnings: What’s in the Cards?


Wyndham Worldwide Corp WYN is scheduled to report fourth-quarter 2017 earnings on Feb 14, before the market opens.

A diversified product portfolio, effective marketing techniques and a robust loyalty program are likely to boost the company’s top line in the to-be-reported quarter. However, effects of the recent hurricanes might have lingered in the fourth quarter and put pressure on earnings.

Meanwhile, shares of the company rallied 42.2% in the past year, outperforming the industry’s gain of 35.1%.

Let’s find out how the company’s results will look like in the fourth quarter.

Factors Likely to Drive Revenues

The Zacks Consensus Estimate for revenues in the fourth quarter is pegged at $1.40 billion, reflecting 6.2% year-over-year growth. This growth is largely attributable to the company’s strong presence across the globe that allows it to rake in additional revenues. The company’s strong loyalty program also attracts customers and should aid the top line.

Through repeated acquisitions and divestitures, Wyndham is successfully expanding its presence worldwide and has further expansion plans for the Asia Pacific, Europe, Middle East, Africa and Indian Ocean (EMEAI) region. Meanwhile, the company also gains from the collaboration between its rental brands as they continue to expand on the cross-selling of each other's product.

Also, it is continuously emphasizing on marketing campaigns and partnerships, digital experiences, website development, on-property amenities and travel perks to enhance guest experience and raise occupancy. To this end, Wyndham offers one of the most generous reward program payouts in the industry that generates 64% additional revenues for its franchisees.

Moreover, Wyndham intends to keep boosting its strong proprietary distribution network through global partnerships with several industry leading online travel and vacation rental portals. These tools are expected to drive revenue in the to-be-reported quarter.

Earnings Likely to Raise Concern

The consensus estimate for fourth-quarter earnings is pegged at $1.35, in line with the prior-year quarter’s reported earnings. Notably, the company’s predicted earnings in the to-be-reported quarter do not reflect the fruits of Wyndham’s recent acquisition of AmericInnand its ongoing strategic initiative of expanding the number of new owners.

Although these efforts are slated to bring long-term growth for the company, high costs associated with such initiatives might pose a concern for Wyndham’s to-be-reported quarter’s margins. This in turn might dent the company’s fourth-quarter earnings.

Moreover, management predicted the effects of the recent hurricanes to linger in the fourth-quarter, affecting earnings.

Our Quantitative Model Does Not Predict a Beat

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: The company has an Earnings ESP of -1.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Wyndham has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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.

Wyndham Worldwide Corp Price and EPS Surprise

Stocks to Consider

Here are a few stocks from the Consumer Discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Choice Hotels CHH has an Earnings ESP of +1.84% and a Zacks Rank #2 (Buy). The company is scheduled to report quarterly numbers on Feb 20.

MGM Resorts International MGM has an Earnings ESP of +42.50% and a Zacks Rank #2. The company is anticipated to report quarterly results on Feb 20.

Churchill Downs CHDN has an Earnings ESP of +29.03% and a Zacks Rank #1. The company is expected to report quarterly numbers on Feb 27.

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