tiprankstipranks
Trending News
More News >
Choice Hotels International (CHH)
NYSE:CHH

Choice Hotels (CHH) AI Stock Analysis

Compare
278 Followers

Top Page

CH

Choice Hotels

(NYSE:CHH)

Rating:69Neutral
Price Target:
$141.00
â–²(8.20%Upside)
Choice Hotels' overall score reflects strong financial performance and positive earnings call guidance, driven by revenue growth and strategic investments. However, high leverage and negative equity pose risks, along with mixed technical indicators and a reasonable valuation suggesting moderate growth potential. Macroeconomic uncertainties and challenges in specific segments further temper the outlook.
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 (CHH) vs. SPDR S&P 500 ETF (SPY)

Choice Hotels Business Overview & Revenue Model

Company DescriptionChoice Hotels International, Inc. is one of the largest and most successful lodging franchisors in the world. Headquartered in Rockville, Maryland, the company operates across various segments of the hospitality industry, including economy, mid-scale, and upscale lodging. Choice Hotels' portfolio includes well-known brands such as Comfort Inn, Quality Inn, and Econo Lodge, as well as extended stay and boutique hotel options like MainStay Suites and Ascend Hotel Collection. With thousands of hotels in more than 40 countries, Choice Hotels caters to a diverse range of travelers, from budget-conscious tourists to business professionals seeking comfort and convenience.
How the Company Makes MoneyChoice Hotels generates revenue primarily through franchise fees collected from its hotel franchisees. These fees are typically a percentage of the gross room revenues generated by the franchised hotels. Additionally, the company earns revenue through marketing and reservation system fees, which franchisees pay for access to Choice Hotels' centralized marketing campaigns and reservation platform. Further income streams include surcharges for optional services provided to franchisees, such as training and support programs, as well as fees from loyalty programs like Choice Privileges. Strategic partnerships and brand licensing agreements also contribute to the company's revenue, enhancing its global footprint and brand recognition.

Choice Hotels Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 3.61%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong first quarter performance with significant growth in key areas such as business travel and extended stay portfolio. However, the outlook remains cautious due to macroeconomic uncertainties impacting RevPAR expectations and upscale segment challenges.
Q1-2025 Updates
Positive Updates
Strong First Quarter Financial Performance
Adjusted EBITDA increased by 4% to a record $129.6 million, and adjusted earnings per share rose by 5% to $1.34 year over year.
Significant Growth in Business Travel Segment
Business travel segment grew 10% year over year in the first quarter, with an impressive over 50% revenue increase from group travel business.
Expansion in Extended Stay Portfolio
Extended stay portfolio size increased by 19% over the past five years, with the segment's pipeline representing half of the total domestic rooms pipeline.
Reward Program Expansion
Choice's rewards program expanded to over 70 million members, an 8% increase year over year, with a 28% increase in global reward night redemptions.
Strong International Pipeline
International rooms pipeline increased by 13% compared to the prior quarter, with a 4% year-over-year expansion in the international rooms portfolio.
Negative Updates
Macroeconomic Uncertainty Impact
Despite strong performance, increased macro uncertainty has led to a more cautious outlook for the remainder of 2025, with adjusted EBITDA guidance adjusted to $615 million to $635 million.
RevPAR Growth Challenges
RevPAR expectations were adjusted to negative 1% to positive 1% for the year, reflecting a more uncertain macroeconomic backdrop.
Decline in Upscale Segment Performance
Upscale segment RevPAR underperformed relative to Smith Travel results, primarily due to properties leaving and newer properties ramping up.
Company Guidance
During Choice Hotels International's First Quarter 2025 Earnings Call, the company provided robust guidance indicating a positive momentum driven by strategic investments and strong performance metrics. The company reported a 4% increase in adjusted EBITDA, reaching a record $129.6 million, and a 5% rise in adjusted earnings per share to $1.34. Global rooms grew by 3.9%, with a notable 4% increase in more revenue-intense rooms. The company achieved a significant 50% year-over-year revenue increase from group travel business and expanded its rewards program by 8% to over 70 million members. Despite macroeconomic uncertainties, Choice Hotels remains optimistic about capturing future demand through its diverse and resilient portfolio, with extended stay rooms and upscale limited-service segments being key growth drivers. The company anticipates domestic RevPAR to range between negative one to positive 1% for the full year, with adjusted EBITDA expected to be between $615 million and $635 million. Choice Hotels also highlighted a strong international pipeline, providing a platform for long-term 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
78
Positive
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
62
Positive
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
70
Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.59B1.58B1.54B1.40B1.07B774.07M
Gross Profit
762.12M744.17M690.28M700.05M599.60M311.16M
EBIT
484.45M463.77M375.03M478.60M428.93M122.05M
EBITDA
547.46M553.64M440.39M511.03M447.94M127.86M
Net Income Common Stockholders
313.19M299.67M258.51M332.15M288.96M75.39M
Balance SheetCash, Cash Equivalents and Short-Term Investments
40.05M40.18M26.75M41.57M511.61M234.78M
Total Assets
2.58B2.53B2.39B2.10B1.93B1.59B
Total Debt
1.99B1.89B1.68B1.27B1.10B1.07B
Net Debt
1.95B1.85B1.65B1.23B584.36M836.70M
Total Liabilities
2.64B2.58B2.36B1.95B1.67B1.59B
Stockholders Equity
-63.93M-45.27M35.60M154.66M265.88M-5.75M
Cash FlowFree Cash Flow
180.49M173.55M178.26M273.48M305.83M75.10M
Operating Cash Flow
338.13M319.40M296.55M367.06M383.70M115.05M
Investing Cash Flow
-94.79M-84.57M-265.63M-442.43M-78.93M-29.47M
Financing Cash Flow
-245.97M-221.71M-45.94M-394.15M-27.72M115.40M

Choice Hotels Technical Analysis

Technical Analysis Sentiment
Positive
Last Price130.32
Price Trends
50DMA
126.61
Positive
100DMA
134.52
Negative
200DMA
135.82
Negative
Market Momentum
MACD
0.26
Negative
RSI
52.79
Neutral
STOCH
73.56
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 130.32 is above the 20-day moving average (MA) of 128.51, above the 50-day MA of 126.61, and below the 200-day MA of 135.82, indicating a neutral trend. The MACD of 0.26 indicates Negative momentum. The RSI at 52.79 is Neutral, neither overbought nor oversold. The STOCH value of 73.56 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 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
HLHLT
73
Outperform
$60.27B39.99-41.19%0.24%7.43%38.52%
HH
72
Outperform
$12.86B17.4622.31%0.45%-7.38%19.62%
IHIHG
70
Neutral
$17.92B30.16-27.16%1.43%6.34%-11.99%
CHCHH
69
Neutral
$6.05B19.82-661.94%0.90%2.75%40.83%
MAMAR
69
Neutral
$73.42B30.53-144.82%0.96%5.45%-9.50%
WHWH
67
Neutral
$6.45B19.9153.31%1.96%4.79%48.48%
63
Neutral
$6.98B11.412.80%4.24%2.68%-24.94%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CHH
Choice Hotels
129.19
13.09
11.27%
H
Hyatt Hotels
134.37
-14.74
-9.89%
IHG
Intercontinental Hotels Group
116.67
13.60
13.19%
MAR
Marriott International
266.06
31.83
13.59%
HLT
Hilton Worldwide Holdings
253.54
43.35
20.62%
WH
Wyndham Hotels & Resorts
82.98
11.48
16.06%

Choice Hotels Corporate Events

Financial Disclosures
Choice Hotels Enhances Financial Reporting Clarity
Neutral
May 15, 2025

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.

Executive/Board ChangesShareholder Meetings
Choice Hotels Shareholders Approve Key Proposals
Neutral
May 15, 2025

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.

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.