Wyndham Worldwide Corporation (WYN) is coming out of the dark times as the company recently surprised on the second quarter by 24.4% as tourism picks up worldwide. It was the fourth earnings surprise in a row.
Wyndham operates 7,160 franchise hotels covering 606,800 hotel rooms worldwide. It also offers access to 3.8 million members in its Exchange & Rentals program access to over 80,000 vacation properties in 100 countries.
Wyndham also operates Vacation Ownership where it sells vacation ownership interests and provides financing for over 155 vacation ownership resorts for 820,000 owners throughout North America, the Caribbean and the South Pacific.
Revenue Rose 5% in the Second Quarter
On July 28, Wyndham Worldwide reported its second quarter results which surprised on the Zacks Consensus by 10 cents. Earnings per share were 51 cents, well above the company’s guidance range of 38 to 42 cents, compared to the Zacks Consensus of 41 cents. Wyndham made 39 cents in the same quarter a year ago.
Revenue rose 5% to $963 million and was boosted by sales momentum at all three divisions. The best performer was Vacation Ownership, which rose 13% compared to a year ago, due to a 16% increase in volume per guest, while tour flow remained about flat.
But even the hotel segment got into the act as revenue climbed 2% to $178 million at the Hotel Group division, mainly due to room growth. The company added the midmarket hotel brand Tryp during the quarter, which consisted of 92 hotels, or about 13,200 rooms, concentrated in cities like Madrid, Barcelona and Spain. 24% of the company’s hotel rooms in the quarter were international.
The Rental Exchange division saw flat revenue of $281 million. In constant currency, revenue rose 3%.
Raised Guidance for 2010
Given the more optimistic outlook in the leisure industry, the company raised its full year guidance range to $1.78 to $1.88 from $1.56 to $1.71 per share.
For the third quarter, Wyndham projects earnings per share between 60 cents and 64 cents.
Vacation Ownership volume per guest is expected to rise 10% to 14% for the year from the prior forecast of 6% to 9%.
Zacks Consensus Estimates Jump
With the raised guidance, the analysts have moved their estimates inline with the company’s range. 6 estimates have been revised higher in the last week for 2010, pushing the Zacks Consensus up 15 cents to $1.85 per share, which is at the high end of the company’s range.
The third quarter estimate has also jumped to 63 cents, just one cent below the high end of the forecast.
Value Fundamentals
It’s been over a year since I last reviewed Wyndham. The earnings are finally starting to come inline with the other fundamentals. Wyndham has attractive valuations again.
It is trading with a forward P/E of just 14x, well under the industry average of 19.9.
Its price-to-book ratio is 1.7. The company also has a solid 1-year return on equity (ROE) of 12.8% whereas the industry is at just 5.6%.
Wyndham is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
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