Choice Hotels (CHH) AI Stock Analysis

• Market Cap: $5.59B
• Dividend Yield: 0.95%
• Average Volume (3M): 398.44K
• Price to Earnings (P/E): 18.5
• Beta (1Y): 0.63
• Revenue Growth: 1.67%
• EPS Growth: 35.34%
• Country: US
• Employees: 1,695
• Sector: Consumer Cyclical
• Sector Strength: 72
• Industry: Travel Lodging
• EPS (TTM): 1.92
• Shares Outstanding: 46,268,375
• 10 Day Avg. Volume: 423,752
• 30 Day Avg. Volume: 398,435
• PEG Ratio: 0.99
• Price to Book (P/B): -148.01
• Price to Sales (P/S): 4.23
• P/FCF Ratio: 38.61
• Enterprise Value/Market Cap: 1.41
• Enterprise Value/Revenue: 4.99
• Enterprise Value/Gross Profit: 9.52
• Enterprise Value/Ebitda: 14.35
• 1Y Price Target: $132.14
• Price Target Upside: 10.99% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 58 Neutral
• Price Target: $130.00 ▲(9.19% Upside)

Choice Hotels' overall stock score reflects a mixed financial performance with strong profitability but high leverage and negative revenue growth. The earnings call provided a positive outlook on international expansion, which offsets some domestic challenges. However, the lack of technical analysis data limits the assessment of market trends.

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. (CHH) is a leading hotel franchisor that operates a global portfolio of over 7,000 hotels across more than 40 countries. The company primarily focuses on the midscale and economy segments of the lodging industry, offering a diverse range of brands such as Comfort Inn, Quality Inn, Clarion, and Econo Lodge. Choice Hotels provides essential services to franchisees, including marketing, reservation systems, and operational support, enabling them to effectively serve their guests while maintaining brand standards.

How the Company Makes Money

Choice Hotels generates revenue primarily through its franchising model. The company earns money by charging franchisees initial franchise fees and ongoing royalty fees, which are typically a percentage of the hotel’s revenue. In addition to these fees, Choice Hotels also profits from various ancillary services, such as marketing and technology services that they provide to their franchisees. The company has established significant partnerships with various travel industry players, including online travel agencies (OTAs) and loyalty programs, which enhance its market reach and customer acquisition. Furthermore, the company's emphasis on loyalty programs, such as Choice Privileges, encourages repeat business, contributing to its overall revenue growth.

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	1.58B	1.58B	1.54B	1.40B	1.07B	774.07M
Gross Profit	826.36M	744.17M	690.28M	700.05M	599.60M	311.16M
EBITDA	547.89M	553.64M	440.39M	511.03M	447.94M	127.86M
Net Income	307.79M	299.67M	258.51M	332.15M	288.96M	75.39M
Balance Sheet
Total Assets	2.66B	2.53B	2.39B	2.10B	1.93B	1.59B
Cash, Cash Equivalents and Short-Term Investments	58.61M	40.18M	26.75M	41.57M	511.61M	234.78M
Total Debt	2.01B	1.89B	1.68B	1.29B	1.11B	1.08B
Total Liabilities	2.69B	2.58B	2.36B	1.95B	1.67B	1.59B
Stockholders Equity	-26.24M	-45.27M	35.60M	154.66M	265.88M	-5.75M
Cash Flow
Free Cash Flow	251.27M	173.55M	178.26M	273.48M	305.83M	75.10M
Operating Cash Flow	321.88M	319.40M	296.55M	367.06M	383.70M	115.05M
Investing Cash Flow	-117.69M	-84.57M	-265.63M	-442.43M	-78.93M	-29.47M
Financing Cash Flow	-206.38M	-221.71M	-45.94M	-394.15M	-27.72M	115.40M

Choice Hotels Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 119.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHH, the sentiment is Negative. The current price of 119.06 is below the 20-day moving average (MA) of 129.03, below the 50-day MA of 128.31, and below the 200-day MA of 135.61, indicating a bearish trend. The MACD of -2.20 indicates Positive momentum. The RSI at 28.81 is Positive, neither overbought nor oversold. The STOCH value of 10.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHH.

Choice Hotels Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WH	74 Outperform	$6.41B	19.68	56.16%	1.88%	3.65%	38.50%
Sector *	67 Neutral	¥271.27B	14.33	6.84%	2.52%	5.08%	-22.38%
HLT	67 Neutral	$61.40B	40.10	-41.19%	0.23%	6.26%	38.11%
H	64 Neutral	$12.97B	32.18	11.66%	0.44%	0.74%	-54.42%
IHG	63 Neutral	$18.19B	24.98	-27.16%	1.40%	8.82%	23.24%
MAR	59 Neutral	$70.56B	29.32	-144.82%	0.99%	5.12%	-11.48%
CHH	58 Neutral	$5.59B	18.53	-661.94%	0.95%	1.67%	35.34%

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.