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Choice Hotels
(NYSE:CHH)
Select Model
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Rating:65Neutral
Price Target:
$119.00
â–¼(-0.16% Downside)
Action:Reiterated
Date:07/01/26
CHH scores in the mid-range primarily because strong operating performance and improving free cash flow are materially offset by a highly leveraged balance sheet. The earnings outlook is constructive (maintained guidance, lower capex, and sizable planned buybacks), while technicals show a longer-term uptrend but limited near-term momentum. Valuation is reasonable with a modest dividend yield, and recent corporate events are supportive but not a major near-term driver.
Positive Factors
Asset-light franchising scale
Choice’s asset-light, franchise-driven model and global scale create durable, recurring revenue streams (royalties, marketing, reservations). Large brand breadth across segments drives diversified fee income and distribution efficiency, supporting steady cash generation and lower capital intensity over time.
Negative Factors
High financial leverage
Elevated leverage limits financial flexibility and raises sensitivity to economic downturns or rising interest rates. A thin equity cushion constrains the company’s ability to absorb cyclical lodging shocks, fund opportunistic investment, or sustain buybacks if operating cash flow weakens over multiple quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Asset-light franchising scale
Choice’s asset-light, franchise-driven model and global scale create durable, recurring revenue streams (royalties, marketing, reservations). Large brand breadth across segments drives diversified fee income and distribution efficiency, supporting steady cash generation and lower capital intensity over time.
Read all positive factors
Choice Hotels Key Performance Indicators (KPIs)
Any
Average Daily Rate Breakdown
Reveals the average income earned per occupied room, providing insight into pricing strategy effectiveness and market positioning.
Reveals the average income earned per occupied room, providing insight into pricing strategy effectiveness and market positioning.
Data provided by:
The Fly
The FlyChoice Hotels (CHH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.99B
Dividend Yield1.32%
Average Volume (3M)653.76K
Price to Earnings (P/E)14.8
Beta (1Y)0.66
Revenue Growth1.18%
EPS Growth12.87%
CountryUS
Employees1,695
SectorConsumer Cyclical
Sector Strength84
IndustryTravel Lodging
Share Statistics
EPS (TTM)7.47
Shares Outstanding45,495,495
10 Day Avg. Volume635,341
30 Day Avg. Volume653,759
Financial Highlights & Ratios
PEG Ratio0.44
Price to Book (P/B)24.27
Price to Sales (P/S)2.75
P/FCF Ratio35.28
Enterprise Value/Market Cap1.45
Enterprise Value/Revenue4.51
Enterprise Value/Gross Profit10.14
Enterprise Value/Ebitda11.66
Forecast
1Y Price Target
$109.00Price Target Upside-8.55% Downside
Rating ConsensusHold
Number of Analyst Covering10
EPS Forecast (FY)7.11
Revenue Forecast (FY)$1.62B
Choice Hotels Business Overview & Revenue Model
Company Description
Choice Hotels International, Inc., also known as Choice Hotels, operates as a prominent global hotel franchisor, conducting its extensive business through its various subsidiary entities. The company's activities are primarily divided into two mai...
How the Company Makes Money
Choice Hotels primarily makes money by franchising its hotel brands to third-party hotel owners and operators rather than owning most of the underlying real estate. Its key revenue streams generally include: (1) Franchise royalties and other recur...
Choice Hotels Earnings Call Summary
Earnings Call Date:Apr 30, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call balanced near-term headwinds with a constructive multi-quarter operational improvement story. Near-term financials showed lower adjusted EBITDA and EPS and RevPAR distortion from last year’s hurricanes, causing investor pushback. However, underlying metrics — accelerating conversion-led room growth, a higher-quality and accretive pipeline, improving unit economics (royalty expansion, loyalty momentum), AI-driven franchisee benefits, materially lower capital intensity, and a clear share-repurchase plan — indicate durable improvement in earnings quality and cash generation. Management maintained full-year guidance and provided visibility into capital returns and free cash flow targets.Positive Updates
Inflection in Rooms Growth and Conversion Momentum
Global rooms grew 1.7% year over year with U.S. gross openings up 32% YoY and nearly 6,000 U.S. gross rooms opened in the quarter. U.S. conversion room openings rose ~59% YoY (C-suite commentary) and U.S. conversion franchise agreements increased 63% YoY (CFO), with the U.S. conversion pipeline up 17% YoY and ~60% of quarter franchise agreements expected to open this year.
Negative Updates
Quarterly Profitability and EPS Declines
Adjusted EBITDA decreased to $126 million from $130 million a year ago, and adjusted EPS fell to $1.07 from $1.34 YoY. Management attributes the EBITDA decline to timing of certain SG&A costs and EPS decline partly to a temporary tax-rate adjustment.
Read all updates
Q1-2026 Updates
Positive
Negative
Inflection in Rooms Growth and Conversion Momentum
Global rooms grew 1.7% year over year with U.S. gross openings up 32% YoY and nearly 6,000 U.S. gross rooms opened in the quarter. U.S. conversion room openings rose ~59% YoY (C-suite commentary) and U.S. conversion franchise agreements increased 63% YoY (CFO), with the U.S. conversion pipeline up 17% YoY and ~60% of quarter franchise agreements expected to open this year.
Read all positive updates
Company Guidance
Choice maintained full‑year 2026 guidance, reiterating adjusted EBITDA of $632–$647 million and adjusted diluted EPS of $6.92–$7.14, while guiding net capital outlays of roughly $20–$45 million for the year (about 70% lower at the midpoint vs. 2025) and announcing a planned $175–$225 million of share repurchases in 2026. Management targets 60–65% free cash flow conversion (excluding franchise agreement acquisition costs) over the next several years, expects adjusted SG&A and partnership revenues to grow in the mid‑single digits, and finished Q1 with $474 million of liquidity and net leverage of 3.2x adjusted EBITDA (target range 3.0–4.0x). Underpinning the outlook were Q1 operating metrics — revenues ex‑reimbursables $217M, adjusted EBITDA $126M, adjusted EPS $1.07, partnership revenues $24.7M — and operating trends including global rooms growth 1.7% YoY, global franchise agreements awarded up ~72% YoY, U.S. conversion activity (expected to account for >80% of openings), U.S. average royalty rate up 11 bps, Q1 proceeds of ≈$25M, and a 51% YoY reduction in development outlays; management said these trends (U.S. RevPAR ex‑hurricane +1.8% YoY; international RevPAR +2.6% currency‑neutral) support the maintained guidance and the potential to trend toward the high end of the range if macro conditions remain constructive.Choice Hotels Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
34
Negative
Cash Flow
63
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.60B | 1.60B | 1.58B | 1.54B | 1.40B | 1.07B |
| Gross Profit | 714.35M | 653.86M | 744.17M | 690.28M | 700.05M | 599.60M |
| EBITDA | 621.32M | 659.27M | 553.64M | 440.39M | 544.52M | 473.67M |
| Net Income | 345.72M | 369.95M | 299.67M | 258.51M | 332.15M | 288.96M |
Balance Sheet | ||||||
| Total Assets | 2.94B | 2.92B | 2.53B | 2.39B | 2.10B | 1.93B |
| Cash, Cash Equivalents and Short-Term Investments | 43.87M | 45.00M | 40.18M | 26.75M | 41.57M | 511.61M |
| Total Debt | 2.11B | 2.13B | 1.89B | 1.68B | 1.29B | 1.11B |
| Total Liabilities | 2.81B | 2.74B | 2.58B | 2.36B | 1.95B | 1.67B |
| Stockholders Equity | 137.43M | 181.23M | -45.27M | 35.60M | 154.66M | 265.88M |
Cash Flow | ||||||
| Free Cash Flow | 245.93M | 124.65M | 173.55M | 178.26M | 277.11M | 305.83M |
| Operating Cash Flow | 226.81M | 270.45M | 319.40M | 296.55M | 367.06M | 383.70M |
| Investing Cash Flow | -171.49M | -218.26M | -84.57M | -265.63M | -442.43M | -78.93M |
| Financing Cash Flow | -54.03M | -50.10M | -221.71M | -45.94M | -394.15M | -27.72M |
Choice Hotels Technical Analysis
Positive
119.19
Price Trends
109.00
Positive
107.67
Positive
103.00
Positive
Market Momentum
-0.14
Positive
49.38
Neutral
38.16
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 119.19 is above the 20-day moving average (MA) of 110.50, above the 50-day MA of 109.00, and above the 200-day MA of 103.00, indicating a neutral trend. The MACD of -0.14 indicates Positive momentum. The RSI at 49.38 is Neutral, neither overbought nor oversold. The STOCH value of 38.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CHH.
Choice Hotels Risk Analysis
Choice Hotels disclosed 33 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $4.38B | 16.18 | 51.62% | 1.76% | 41.59% | 48.34% | |
71 Outperform | $24.16B | 40.32 | -23.50% | 1.21% | 5.59% | 26.44% | |
66 Neutral | $12.37B | 4.65 | 41.76% | 3.60% | 9.63% | 59.04% | |
65 Neutral | $4.99B | 14.80 | 312.73% | 1.32% | 1.18% | 12.87% | |
62 Neutral | $17.89B | -546.10 | -1.00% | 0.36% | 7.74% | -104.45% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $5.98B | 31.14 | 37.33% | 2.13% | 1.41% | -40.51% |
* Consumer Cyclical Sector Average
CHH
Choice Hotels
109.72
-23.29
-17.51%
HTHT
H World Group
41.11
9.46
29.89%
H
Hyatt Hotels
191.14
41.12
27.41%
IHG
Intercontinental Hotels Group
165.01
46.02
38.68%
WH
Wyndham Hotels & Resorts
78.54
-10.57
-11.86%
ATAT
Atour Lifestyle Holdings
32.21
-2.45
-7.06%
Choice Hotels Corporate Events
Business Operations and StrategyExecutive/Board Changes
Choice Hotels adds AI-focused leader to board
Positive
Jul 1, 2026
Choice Hotels International, Inc. is one of the largest global lodging franchisors, with more than 7,500 hotels and over 650,000 rooms across 51 countries and territories. Its portfolio of 22 brands spans full-service upper upscale, midscale, exte...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and ComplianceShareholder Meetings
Choice Hotels Expands Board Size Following Shareholder Approvals
Positive
May 21, 2026
On May 21, 2026, Choice Hotels International held its 2026 Annual Meeting of Shareholders, where investors approved an amendment to the company’s Certificate of Incorporation to expand the board size range from three to twelve directors to a...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Choice Hotels names interim CEO amid leadership transition
Neutral
May 20, 2026
On May 20, 2026, Choice Hotels International announced that President and CEO Patrick Pacious stepped down from his roles and will serve as an advisor through August 31, 2026, under a transition and separation agreement that provides salary contin...
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.