Choice Hotels (CHH) AI Stock Analysis

• Market Cap: $4.76B
• Dividend Yield: 1.32%
• Average Volume (3M): 711.50K
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.58
• Revenue Growth: 2.76%
• EPS Growth: 56.02%
• Country: US
• Employees: 1,695
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Travel Lodging
• EPS (TTM): 2.10
• Shares Outstanding: 46,272,617
• 10 Day Avg. Volume: 642,413
• 30 Day Avg. Volume: 711,500
• 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: 1.42
• Enterprise Value/Revenue: 4.22
• Enterprise Value/Gross Profit: 8.20
• Enterprise Value/Ebitda: 10.56
• 1Y Price Target: $101.56
• Price Target Upside: -1.21% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 10
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 63 Neutral
• Price Target: $108.00 ▲(5.06% Upside)

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

Asset-light Franchise Model

An asset-light franchisor model creates durable recurring revenue from royalties and services, reducing capital intensity and enabling scalable margin expansion. Loyalty and distribution partnerships deepen network effects, supporting steady cash flow and resilience across economic cycles.

Strong Operating Margins

Elevated gross and EBITDA margins reflect efficient franchising operations and high operating leverage in the business model. Sustainable margins translate into stronger free cash generation potential and capacity to fund franchise support, international expansion, and strategic initiatives over the medium term.

Robust International & Pipeline Growth

Rapid franchise wins and a disproportionately accretive pipeline concentrated in higher-revenue brands support durable revenue mix improvement. International expansion and direct franchising increase scale and royalty density, strengthening long-term growth runway and margin sustainability.

Negative Factors

High Financial Leverage

Significant leverage and a negative return on equity constrain financial flexibility, raising refinancing and interest-rate sensitivity over multi-quarter horizons. High debt limits capacity for share repurchases, bolt-on M&A, or cushioning franchisee downturns, increasing downside risk in stress scenarios.

Declining Free Cash Flow Growth

A decline in free cash flow growth erodes the company's ability to de-lever, invest in technology or international rollout, and sustain shareholder returns. Although conversion ratios are reasonable, continued FCF contraction would weaken liquidity and strategic optionality over the medium term.

Demand Mix & RevPAR Pressure

Exposure to weaker government and international inbound segments reduces RevPAR and royalty income for franchisees, which can slow development and franchise fee growth. Persistent softness in these demand channels would structurally pressure revenue trends and franchise economics over several quarters.

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 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 Financial Statement Overview

Summary

Choice Hotels shows strong profitability and revenue growth, with efficient operations reflected in high margins. However, the high debt-to-equity ratio and negative return on equity indicate financial instability, posing significant risks. Stable cash flow generation is overshadowed by declining free cash flow growth, impacting future 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.

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.

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.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 102.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 102.8 is below the 20-day moving average (MA) of 104.67, above the 50-day MA of 96.57, and below the 200-day MA of 112.31, indicating a neutral trend. The MACD of 1.57 indicates Positive momentum. The RSI at 51.48 is Neutral, neither overbought nor oversold. The STOCH value of 16.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CHH.

Choice Hotels Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATAT	75 Outperform	$4.94B	25.32	45.85%	1.76%	36.17%	25.41%
HTHT	74 Outperform	$14.67B	28.36	32.28%	3.60%	5.70%	9.53%
IHG	70 Neutral	$20.32B	28.62	―	1.21%	8.89%	23.20%
WH	67 Neutral	$5.50B	16.76	57.98%	2.13%	3.38%	38.04%
CHH	63 Neutral	$4.76B	12.46	1418.13%	1.32%	2.76%	56.02%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
H	56 Neutral	$14.85B	-169.49	-2.45%	0.36%	2.61%	-106.74%

Choice Hotels Corporate Events

Choice Hotels standardizes and updates executive severance framework

On December 31, 2025, Choice Hotels International, Inc. updated its executive non-competition, non-solicitation and severance framework by entering into a new Non-Competition, Non-Solicitation and Severance Benefit Agreement with Chief Segment and International Operations Officer Raul Ramirez and designating this revised 2025 agreement as the template for future executive officers, subject to board committee approval. The 2025 agreement shifts severance to single lump-sum payments, refines key definitions such as change in control and good reason, adds cooperation requirements, clarifies tax withholding, reinforces employees’ rights to communicate with government agencies and protections under labor and trade secrets laws, and includes more detailed provisions to address Section 409A of the Internal Revenue Code. On the same date, Choice amended existing severance agreements with executives Dominic Dragisich, David Pepper, Scott Oaksmith and Simone Wu to align severance timing, tax withholding and protected-rights language with Section 409A and the updated 2025 template, signaling a broader standardization and compliance-focused tightening of its executive compensation and post-employment protections framework.

The most recent analyst rating on (CHH) stock is a Sell with a $99.00 price target. To see the full list of analyst forecasts on Choice Hotels stock, see the CHH Stock Forecast page.

Choice Hotels Reports Strong Q3 2025 Financial Results

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.

The most recent analyst rating on (CHH) stock is a Hold with a $125.00 price target. To see the full list of analyst forecasts on Choice Hotels stock, see the CHH Stock Forecast page.