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Wyndham (WYN) Q1 Earnings Top Estimates, Revenues Lag

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

Earnings and Revenue Discussion

Adjusted earnings of $1.12 per share beat the Zacks Consensus Estimate of $1.11 by 1%. Earnings were also up 9% year over year, reflecting higher revenues and a lower share count.

Net revenue of $1.30 billion also grew 3% year over year on the back of increased contribution from the hotel group, destination network and the vacation ownership segments. Revenues, however, missed the Zacks Consensus Estimate of $1.32 billion by 1.5%.

Inside the Headline Numbers

Adjusted EBITDA (excluding share-based compensation expense) grew 3% year over year to $304 million. Adjusted EBITDA was hurt by foreign currency headwinds of $6 million. In constant currency, the figure grew 6%.

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

Hotel Group revenues inched up 1% year over year to $295 million.

Domestic RevPAR was flat. In constant currency, total system-wide RevPAR dipped 1.6% mainly due to weak demand in U.S. and Canadian oil markets, along with higher unit growth in lower RevPAR regions like China.

Adjusted EBITDA increased 6% to $84 million driven by growth in the Wyndham Rewards credit card program, strong performance at owned hotels and prudent expense management.

Revenues at Destination Network grew 4% year over year to $385 million. However, in constant currency and excluding acquisitions, revenues recorded an improvement of 5%.

Exchange revenues tumbled 2% to $182 million. However, the figure remained stable in constant currency, as exchange revenue per member was flat.

Vacation rental revenues were $183 million, reflecting 10% year-over-year growth. In constant currency and excluding acquisitions, vacation rental revenues climbed 9% driven by a 7% increase in transaction volumes, while average net price per vacation rental was up 2.3%.

Adjusted EBITDA inched up 1% to $105 million. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA grew 3%.

Revenues at Vacation Ownership rose 4% year over year to $641 million.

Gross VOI sales (including currency impact) surged 10% to $428 million, reflecting higher volume per guest (VPG). VPG was up 3.8% in constant currency, while tour flow grew 6.5%.

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

Share Repurchase

The company repurchased 2.5 million shares for $175 million during the first quarter of 2016. 

2016 Guidance

Wyndham expects adjusted earnings per share in the range of $5.61 to $5.75 per share, up from the prior guidance of $5.46–$5.60.

For 2016, the company reiterated its revenue guidance in the range of $5.80–$5.95 billion.

Adjusted EBITDA is projected to be $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 Hyatt Hotels Corp. H and Red Lion Hotels Corp. RLH. Both these stocks carry a Zacks Rank #2 (Buy).

Investors interested in the broader consumer discretionary sector may also consider Boyd Gaming Corp. BYD, sporting a Zacks Rank #1 (Strong Buy).

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WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
 
BOYD GAMING CP (BYD): Free Stock Analysis Report
 
HYATT HOTELS CP (H): Free Stock Analysis Report
 
RED LION HOTELS (RLH): Free Stock Analysis Report
 
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