Choice Hotels (CHH) AI Stock Analysis

• Market Cap: $5.53B
• Dividend Yield: 0.96%
• Average Volume (3M): 410.86K
• Price to Earnings (P/E): 18.3
• Beta (1Y): 0.64
• Revenue Growth: 1.67%
• EPS Growth: 35.34%
• Country: US
• Employees: 1,695
• Sector: Consumer Cyclical
• Sector Strength: 81
• Industry: Travel Lodging
• EPS (TTM): 1.92
• Shares Outstanding: 46,268,375
• 10 Day Avg. Volume: 400,378
• 30 Day Avg. Volume: 410,863
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.42
• Enterprise Value/Revenue: 4.99
• Enterprise Value/Gross Profit: 9.52
• Enterprise Value/Ebitda: 14.35
• 1Y Price Target: $129.40
• Price Target Upside: 8.21% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 6

• Rating: 59 Neutral
• Price Target: $125.00 ▲(4.53% Upside)

Choice Hotels' overall stock score reflects a mixed financial performance with strong profitability but concerning leverage and revenue trends. Technical analysis indicates a bearish market sentiment, while valuation remains fair. The earnings call provided a balanced view of growth opportunities and challenges, particularly in international markets.

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., 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 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 shows a mixed financial position. Strong profitability metrics are overshadowed by negative revenue growth and high leverage. The cash flow situation is improving, but the balance sheet's negative equity and high debt levels are concerning.

Income Statement

Choice Hotels shows a mixed performance in its income statement. The company has maintained a relatively stable gross profit margin around 48% in the TTM, indicating effective cost management. However, the revenue growth rate has turned negative in the TTM, reflecting a potential decline in sales. The net profit margin remains healthy at approximately 19.75%, suggesting profitability, but the declining revenue growth is a concern.

Balance Sheet

The balance sheet reveals significant financial leverage with a negative stockholders' equity, leading to a concerning debt-to-equity ratio. The negative return on equity in the TTM indicates that the company is not generating sufficient returns on its equity base. The equity ratio is also negative, highlighting potential financial instability.

Cash Flow

Cash flow analysis shows a positive trend with a 39.2% growth in free cash flow in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is below 1, suggesting that not all net income is being converted into cash, which could be a risk if it persists. However, the free cash flow to net income ratio is over 50%, indicating decent cash flow relative to net income.

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: 119.58
• 50DMA: Negative
• 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 Negative. The current price of 119.58 is below the 20-day moving average (MA) of 121.63, below the 50-day MA of 126.83, and below the 200-day MA of 134.32, indicating a bearish trend. The MACD of -2.26 indicates Negative momentum. The RSI at 40.04 is Neutral, neither overbought nor oversold. The STOCH value of 30.89 is Neutral, 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	$6.61B	20.30	56.16%	1.82%	3.65%	38.50%
HLT	70 Outperform	$64.93B	42.41	-41.19%	0.22%	6.26%	38.11%
H	69 Neutral	$13.83B	34.17	11.66%	0.42%	0.74%	-54.42%
MAR	65 Neutral	$72.71B	30.22	-144.82%	0.97%	5.12%	-11.48%
IHG	63 Neutral	$18.52B	25.56	-27.16%	1.41%	8.89%	23.20%
Sector *	61 Neutral	$17.67B	14.34	-5.25%	3.04%	1.27%	-14.70%
CHH	59 Neutral	$5.53B	18.35	-661.94%	0.96%	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.