Choice Hotels (CHH) AI Stock Analysis

• Market Cap: $6.05B
• Dividend Yield: 0.9%
• Average Volume (3M): 422.23K
• Price to Earnings (P/E): 19.8
• Beta (1Y): 0.60
• Revenue Growth: 2.75%
• EPS Growth: 40.83%
• Country: US
• Employees: 1,695
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Travel Lodging
• EPS (TTM): 1.34
• Shares Outstanding: 46,399,560
• 10 Day Avg. Volume: 352,494
• 30 Day Avg. Volume: 422,230
• PEG Ratio: 1.13
• Price to Book (P/B): 39.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 22.49
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 1.18
• Enterprise Value/Gross Profit: 9.69
• Enterprise Value/Ebitda: 3.80
• 1Y Price Target: $128.86
• Price Target Upside: -1.12% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 69 Neutral
• Price Target: $141.00 ▲(8.20%Upside)

Choice Hotels' overall score reflects strong financial performance and positive earnings call guidance, driven by revenue growth and strategic investments. However, high leverage and negative equity pose risks, along with mixed technical indicators and a reasonable valuation suggesting moderate growth potential. Macroeconomic uncertainties and challenges in specific segments further temper the outlook.

Positive Factors

Pipeline Growth

CHH's pipeline could potentially lead to significant increases in gross fees, providing a possible upside.

Negative Factors

Net Rooms Growth

CHH's net rooms growth has historically lagged behind its peers, suggesting a potential weakness in expansion strategy.

Valuation Concerns

CHH's current 14x EV/EBITDA valuation seems disconnected vs. its modest EBITDA growth outlook.

Choice Hotels Business Overview & Revenue Model

Company Description

Choice Hotels International, Inc. is one of the largest and most successful lodging franchisors in the world. Headquartered in Rockville, Maryland, the company operates across various segments of the hospitality industry, including economy, mid-scale, and upscale lodging. Choice Hotels' portfolio includes well-known brands such as Comfort Inn, Quality Inn, and Econo Lodge, as well as extended stay and boutique hotel options like MainStay Suites and Ascend Hotel Collection. With thousands of hotels in more than 40 countries, Choice Hotels caters to a diverse range of travelers, from budget-conscious tourists to business professionals seeking comfort and convenience.

How the Company Makes Money

Choice Hotels generates revenue primarily through franchise fees collected from its hotel franchisees. These fees are typically a percentage of the gross room revenues generated by the franchised hotels. Additionally, the company earns revenue through marketing and reservation system fees, which franchisees pay for access to Choice Hotels' centralized marketing campaigns and reservation platform. Further income streams include surcharges for optional services provided to franchisees, such as training and support programs, as well as fees from loyalty programs like Choice Privileges. Strategic partnerships and brand licensing agreements also contribute to the company's revenue, enhancing its global footprint and brand recognition.

Choice Hotels Financial Statement Overview

Summary

Choice Hotels exhibits strong revenue growth and operational profitability with solid margins and cash flow generation. However, high leverage and negative stockholders' equity on the balance sheet pose financial stability risks. The company demonstrates resilience in its operations, supported by effective cash flow management, but must address its leverage to ensure long-term financial health.

Income Statement

Choice Hotels has shown strong revenue growth over the years with a notable increase in revenue from $774.1 million in 2020 to $1.59 billion in TTM 2025. Gross profit margin has remained robust, indicating effective cost management alongside revenue growth. The net profit margin is healthy, reflecting consistent profitability. EBIT and EBITDA margins are strong, showcasing operational efficiency. Despite these strengths, net income has seen some fluctuation, indicating potential challenges in sustaining margins.

Balance Sheet

The balance sheet indicates a high debt-to-equity ratio due to negative stockholders' equity, primarily driven by high total liabilities. This presents a significant leverage risk. However, the company has managed to grow its asset base consistently. The negative equity ratio highlights financial instability, but the business has been sustaining operations, suggesting resilience despite the leverage challenges.

Cash Flow

The cash flow analysis shows robust operating cash flow, consistently supporting free cash flow generation. There is a positive free cash flow growth rate, reflecting effective cash management. The operating cash flow to net income ratio indicates strong cash earnings quality. However, the free cash flow to net income ratio suggests some variability in translating earnings into cash flow, albeit maintaining overall healthy cash flow operations.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.59B	1.58B	1.54B	1.40B	1.07B	774.07M
	Gross Profit
762.12M	744.17M	690.28M	700.05M	599.60M	311.16M
	EBIT
484.45M	463.77M	375.03M	478.60M	428.93M	122.05M
	EBITDA
547.46M	553.64M	440.39M	511.03M	447.94M	127.86M
	Net Income Common Stockholders
313.19M	299.67M	258.51M	332.15M	288.96M	75.39M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
40.05M	40.18M	26.75M	41.57M	511.61M	234.78M
	Total Assets
2.58B	2.53B	2.39B	2.10B	1.93B	1.59B
	Total Debt
1.99B	1.89B	1.68B	1.27B	1.10B	1.07B
	Net Debt
1.95B	1.85B	1.65B	1.23B	584.36M	836.70M
	Total Liabilities
2.64B	2.58B	2.36B	1.95B	1.67B	1.59B
	Stockholders Equity
-63.93M	-45.27M	35.60M	154.66M	265.88M	-5.75M
Cash Flow		Free Cash Flow
180.49M	173.55M	178.26M	273.48M	305.83M	75.10M
	Operating Cash Flow
338.13M	319.40M	296.55M	367.06M	383.70M	115.05M
	Investing Cash Flow
-94.79M	-84.57M	-265.63M	-442.43M	-78.93M	-29.47M
	Financing Cash Flow
-245.97M	-221.71M	-45.94M	-394.15M	-27.72M	115.40M

Choice Hotels Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 130.32
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHH, the sentiment is Positive. The current price of 130.32 is above the 20-day moving average (MA) of 128.51, above the 50-day MA of 126.61, and below the 200-day MA of 135.82, indicating a neutral trend. The MACD of 0.26 indicates Negative momentum. The RSI at 52.79 is Neutral, neither overbought nor oversold. The STOCH value of 73.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CHH.

Choice Hotels Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HLT	73 Outperform	$60.27B	39.99	-41.19%	0.24%	7.43%	38.52%
H	72 Outperform	$12.86B	17.46	22.31%	0.45%	-7.38%	19.62%
IHG	70 Neutral	$17.92B	30.16	-27.16%	1.43%	6.34%	-11.99%
CHH	69 Neutral	$6.05B	19.82	-661.94%	0.90%	2.75%	40.83%
MAR	69 Neutral	$73.42B	30.53	-144.82%	0.96%	5.45%	-9.50%
WH	67 Neutral	$6.45B	19.91	53.31%	1.96%	4.79%	48.48%
Sector *	63 Neutral	$6.98B	11.41	2.80%	4.24%	2.68%	-24.94%

Choice Hotels Corporate Events

Choice Hotels Enhances Financial Reporting Clarity

Choice Hotels International, Inc. has reclassified certain prior year amounts in its consolidated statements of income to maintain comparability with the current year presentation. These reclassifications, which took place in 2024, affected various revenue and expense categories but did not impact the company’s previously reported total revenues, total operating expenses, operating income, or net income. This move is aimed at enhancing clarity and consistency in financial reporting, potentially benefiting stakeholders by providing a clearer view of the company’s financial performance.

The most recent analyst rating on (CHH) stock is a Hold with a $144.00 price target. To see the full list of analyst forecasts on Choice Hotels stock, see the CHH Stock Forecast page.

Choice Hotels Shareholders Approve Key Proposals

During the recent Annual Meeting, Choice Hotels‘ shareholders voted on several key proposals. Eleven directors were elected to serve until the 2026 Annual Meeting, and the shareholders approved executive compensation, the 2025 Long-Term Incentive Plan, and the appointment of Ernst & Young LLP as the independent accounting firm for 2025. Additionally, a shareholder proposal for a simple majority vote requirement in the company’s documents was approved.

The most recent analyst rating on (CHH) stock is a Hold with a $144.00 price target. To see the full list of analyst forecasts on Choice Hotels stock, see the CHH Stock Forecast page.