On Friday, Baird, a financial services firm, adjusted its price target for Wyndham Hotels (NYSE: WH), bringing it down to $86 from the previous $87, while maintaining an Outperform rating on the stock.
The firm's analysis indicates that despite softer Revenue per Available Room (RevPAR) trends impacting estimates and market sentiment, the company's stock still holds value. Wyndham Hotels' shares are currently trading at approximately 15.5 times the estimated earnings per share (EPS) for 2025, which is a valuation comparable to levels seen in 2019, excluding the pandemic period.
The analyst from Baird noted that while the near-term outlook appears negative due to the declining RevPAR, particularly in the lower-end chain scales, the comparisons are expected to become more favorable after the first quarter of 2024. The market consensus on earnings estimates may be slightly on the lower side, but the analyst believes that investors have already accounted for this in their expectations.
Furthermore, the analyst suggested that a modest reduction in the company's full-year guidance, which could be announced next week, might serve as a positive trigger for the stock. This is because a guidance cut is already anticipated by the buy-side investors, and thus, it could help to recalibrate expectations and potentially lead to a more positive outlook for the remainder of the year.
Investors and stakeholders in the hospitality sector will be keeping a close eye on Wyndham Hotels' upcoming announcements, particularly concerning their full-year guidance, to gauge the potential impact on the stock's performance and the broader industry trends.
InvestingPro Insights
Wyndham Hotels (NYSE: WH) presents a mixed financial landscape according to recent InvestingPro data. With a market cap of $5.61B and a solid gross profit margin of 68.06% for the last twelve months as of Q4 2023, the company demonstrates strong profitability. This is further supported by an impressive operating income margin of 37.21% for the same period. The company's commitment to shareholder returns is evident with a dividend growth of 18.75% and a current dividend yield of 2.19%.
InvestingPro Tips highlight the company's proactive management, which has been aggressively buying back shares, and its consistent track record of raising its dividend for three consecutive years. These actions suggest confidence in the company's financial health and future outlook. Additionally, the stock's low price volatility may appeal to investors seeking stability in their portfolio.
For investors looking for a deeper dive into Wyndham Hotels' financials and strategic moves, there are over 10 additional InvestingPro Tips available, which can be accessed with the use of coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With the next earnings date approaching on April 24, 2024, these insights could prove invaluable in making informed investment decisions.
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