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Choice Hotels International (CHH)
NYSE:CHH
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Choice Hotels
(NYSE:CHH)
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Rating:63Neutral
Price Target:
$90.00
▼(-1.41% Downside)
Choice Hotels' overall stock score is driven by strong earnings call results and undervaluation, offset by high financial leverage and bearish technical indicators. The company's profitability and strategic international expansion are positive, but financial risks and market momentum concerns weigh on the score.
Positive Factors
International Expansion
The significant growth in international operations enhances Choice Hotels' market reach and revenue potential, providing a durable competitive advantage.
Franchise Growth
Strong franchise growth indicates robust demand for Choice Hotels' brands, supporting long-term revenue and market position.
Adjusted EBITDA Growth
Consistent EBITDA growth reflects operational efficiency and strong performance in higher revenue segments, sustaining profitability.
Negative Factors
High Debt Levels
Significant leverage poses financial risks, potentially limiting strategic flexibility and increasing vulnerability to economic downturns.
Declining U.S. RevPAR
RevPAR decline in the U.S. market could impact revenue growth, especially if demand in key segments remains weak.
Free Cash Flow Decline
Decreasing free cash flow growth may constrain future investments and limit financial flexibility, affecting long-term growth prospects.
Choice Hotels (CHH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.22B
Dividend Yield1.32%
Average Volume (3M)687.97K
Price to Earnings (P/E)11.2
Beta (1Y)0.54
Revenue Growth2.76%
EPS Growth56.02%
CountryUS
Employees1,695
SectorConsumer Cyclical
Sector Strength84
IndustryTravel Lodging
Share Statistics
EPS (TTM)2.10
Shares Outstanding46,272,617
10 Day Avg. Volume821,432
30 Day Avg. Volume687,965
Financial Highlights & Ratios
PEG Ratio0.99
Price to Book (P/B)-148.01
Price to Sales (P/S)4.23
P/FCF Ratio38.61
Enterprise Value/Market Cap1.64
Enterprise Value/Revenue4.35
Enterprise Value/Gross Profit8.45
Enterprise Value/Ebitda10.89
Forecast
1Y Price Target
$103.89Price Target Upside13.80% Upside
Rating ConsensusHold
Number of Analyst Covering9
EPS Forecast (FY)6.93
Revenue Forecast (FY)$1.57B
Choice Hotels Business Overview & Revenue Model
Company DescriptionChoice Hotels International, Inc., together with its subsidiaries, operates as a hotel franchisor worldwide. The company operates in Hotel Franchising and Corporate & Other segments. It franchises lodging properties under the brand names of Comfort Inn, Comfort Suites, Quality, Clarion, Clarion Pointe, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, WoodSpring Suites, Everhome Suites, Cambria Hotels, and Ascend Hotel Collection. The company also develops and markets cloud-based property management software to non-franchised hoteliers. As of March 31, 2022, it had approximately 7,000 hotels with approximately 600,000 rooms in 35 countries and territories. Choice Hotels International, Inc. was founded in 1939 and is headquartered in Rockville, Maryland.
How the Company Makes MoneyChoice Hotels generates revenue primarily through franchise fees paid by hotel owners who operate under its brands. These fees typically include an initial franchise fee, ongoing royalties based on a percentage of room revenue, and additional fees for marketing and reservation services. The company also earns income from ancillary services, such as training, technology solutions, and property management support. Significant partnerships with online travel agencies and global distribution systems enhance its market presence and drive bookings, contributing to its overall earnings. Moreover, Choice Hotels' loyalty program, Choice Privileges, encourages repeat business and customer retention, further bolstering its revenue stream.
Choice Hotels Key Performance Indicators (KPIs)
Any
Occupancy Percentage
Indicates the proportion of available rooms that are occupied, reflecting demand strength and operational efficiency in maximizing room usage.
Indicates the proportion of available rooms that are occupied, reflecting demand strength and operational efficiency in maximizing room usage.
Data provided by:
The Fly
The FlyChoice Hotels Earnings Call Summary
Earnings Call Date:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 18, 2026
Earnings Call Sentiment Positive
The earnings call showcased significant growth in adjusted EBITDA and international expansion, with strong pipeline metrics and business travel revenue gains. However, challenges were noted in U.S. RevPAR performance and specific demand segments, such as government and international inbound travel. Despite these challenges, the overall strategic progress and financial results indicate a positive trajectory.Q3-2025 Updates
Positive Updates
Record-Breaking Adjusted EBITDA
Choice Hotels achieved a record third quarter adjusted EBITDA of $190 million, up 7% year-over-year, highlighting strong performance across higher revenue segments and international markets.
International Growth Surge
The international portfolio expanded by over 8% year-over-year, with international adjusted EBITDA growing by 35%. The company also successfully transitioned 40% of its international rooms portfolio to a direct franchising model.
Strong Pipeline and Franchise Growth
Global franchise agreements awarded increased by 54% year-over-year, with nearly 98% of rooms in the pipeline being in higher revenue brands. The pipeline is expected to be 1.7x more accretive than the current portfolio.
Business Travel and Group Revenue Growth
Business travel now represents 40% of stays, with group revenue rising by 35% year-over-year and small and medium business revenue growing by 18%.
Negative Updates
U.S. RevPAR Decline
U.S. RevPAR declined by 3.2% year-over-year, mainly due to softer government and international inbound demand.
Impact of Higher Amortization and Tax Expenses
Adjusted earnings per share decreased to $2.10 from $2.23, impacted by higher amortization expense related to the Choice Hotels Canada acquisition and a temporary increase in income tax expenses.
Challenges in Government and International Inbound Demand
Government travel was down by 20% during the quarter, and inbound travel from Canada decreased by 30%, impacting overall RevPAR performance.
Company Guidance
During Choice Hotels International's third quarter 2025 earnings call, the company reported a 7% increase in adjusted EBITDA to $190 million, driven by strong performance across its higher revenue segments and international operations. The company raised the midpoint of its full-year earnings outlook, emphasizing a nearly 2.5% year-over-year increase in net global rooms, with growth led by a 3.5% increase in higher revenue segments. The call highlighted a 54% year-over-year rise in global franchise agreements and projected that hotels in their pipeline are expected to be 1.7 times more accretive than the current portfolio. Internationally, the company achieved 35% growth in adjusted international EBITDA, with a significant 8% year-over-year expansion in its international portfolio. In the U.S., the company noted an improvement in economy transient segment occupancy and a slight increase in occupancy index across its portfolio, indicating potential for broader RevPAR growth. The company is optimistic about demand catalysts such as the 2026 World Cup and favorable demographic trends, expecting these factors to propel future growth.Choice Hotels Financial Statement Overview
Summary
Choice Hotels demonstrates strong profitability and revenue growth, with efficient operations. However, high leverage and negative return on equity pose significant financial risks. Stable cash flow generation is offset by declining free cash flow growth, impacting financial flexibility.Income Statement
Choice Hotels has demonstrated consistent revenue growth, with a TTM revenue growth rate of 22.9%. The company maintains strong profitability metrics, with a gross profit margin of 52.4% and a net profit margin of 19.5% in the TTM period. EBIT and EBITDA margins are also robust at 31.3% and 34.7%, respectively, indicating efficient operations. However, the growth rate has slowed compared to previous years, which could be a concern if the trend continues.78
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of -76.7 in the TTM period, indicating significant leverage and potential financial risk. Return on equity is negative, reflecting challenges in generating returns for shareholders. The equity ratio is low, suggesting a heavy reliance on debt financing. These factors highlight financial instability and potential risks if market conditions worsen.45
Neutral
Cash Flow
Cash flow analysis shows a decline in free cash flow growth, with a negative growth rate of -5.0% in the TTM period. The operating cash flow to net income ratio is 0.71, indicating moderate cash generation relative to net income. The free cash flow to net income ratio is 0.78, suggesting that a significant portion of net income is converted into free cash flow. While cash flow metrics are generally stable, the decline in free cash flow growth is a concern.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.60B | 1.58B | 1.54B | 1.40B | 1.07B | 774.07M |
| Gross Profit | 821.50M | 744.17M | 690.28M | 700.05M | 599.60M | 311.16M |
| EBITDA | 637.42M | 553.64M | 440.39M | 544.52M | 473.67M | 150.49M |
| Net Income | 382.07M | 299.67M | 258.51M | 332.15M | 288.96M | 75.39M |
Balance Sheet | ||||||
| Total Assets | 2.91B | 2.53B | 2.39B | 2.10B | 1.93B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 52.58M | 40.18M | 26.75M | 41.57M | 511.61M | 234.78M |
| Total Debt | 2.03B | 1.89B | 1.68B | 1.29B | 1.11B | 1.08B |
| Total Liabilities | 2.76B | 2.58B | 2.36B | 1.95B | 1.67B | 1.59B |
| Stockholders Equity | 149.77M | -45.27M | 35.60M | 154.66M | 265.88M | -5.75M |
Cash Flow | ||||||
| Free Cash Flow | 210.53M | 173.55M | 178.26M | 277.11M | 305.83M | 75.10M |
| Operating Cash Flow | 267.62M | 319.40M | 296.55M | 367.06M | 383.70M | 115.05M |
| Investing Cash Flow | -199.06M | -84.57M | -265.63M | -442.43M | -78.93M | -29.47M |
| Financing Cash Flow | -76.47M | -221.71M | -45.94M | -394.15M | -27.72M | 115.40M |
Choice Hotels Technical Analysis
Neutral
91.29
Price Trends
94.77
Negative
106.38
Negative
117.49
Negative
Market Momentum
-2.19
Negative
50.24
Neutral
61.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHH, the sentiment is Neutral. The current price of 91.29 is above the 20-day moving average (MA) of 89.44, below the 50-day MA of 94.77, and below the 200-day MA of 117.49, indicating a neutral trend. The MACD of -2.19 indicates Negative momentum. The RSI at 50.24 is Neutral, neither overbought nor oversold. The STOCH value of 61.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CHH.
Choice Hotels Risk Analysis
Choice Hotels disclosed 32 risk factors in its most recent earnings report. Choice Hotels reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Choice Hotels Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $5.91B | 29.30 | 45.85% | 1.75% | 36.17% | 25.41% | |
74 Outperform | $14.50B | 27.78 | 32.28% | 3.67% | 5.70% | 9.53% | |
70 Neutral | $20.57B | 28.90 | ― | 1.25% | 8.89% | 23.20% | |
67 Neutral | $5.80B | 17.67 | 57.98% | 2.14% | 3.38% | 38.04% | |
63 Neutral | $4.22B | 11.20 | 1418.13% | 1.32% | 2.76% | 56.02% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $15.34B | ― | -2.45% | 0.37% | 2.61% | -106.74% |
* Consumer Cyclical Sector Average
CHH
Choice Hotels
91.29
-52.52
-36.52%
HTHT
H World Group
47.98
16.94
54.57%
H
Hyatt Hotels
161.55
2.19
1.37%
IHG
Intercontinental Hotels Group
138.67
13.08
10.41%
WH
Wyndham Hotels & Resorts
76.75
-26.58
-25.72%
ATAT
Atour Lifestyle Holdings
42.76
16.33
61.79%
Choice Hotels Corporate Events
Business Operations and StrategyFinancial Disclosures
Choice Hotels Reports Strong Q3 2025 Financial Results
Positive
Nov 5, 2025
On November 5, 2025, Choice Hotels International reported its third quarter 2025 results, showcasing a 2.3% global net room growth and a 54% increase in global franchise agreements. The company achieved a net income of $180 million, up from $105.7 million in the same period of 2024, and a record adjusted EBITDA of $190.1 million. Despite a decrease in adjusted diluted EPS due to acquisition-related expenses, Choice Hotels expanded its international operations significantly, adding new rooms and entering new markets, which positions the company for long-term growth and increased profitability.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.