Choice Hotels International, Inc. CHH is slated to announce its fourth-quarter 2023 results on Feb 20, 2023, before the opening bell.
In the preceding quarter, the company’s earnings missed the Zacks Consensus Estimate, while the revenues surpassed the same. Earnings and revenues increased 16.7% and 3% from the year-ago quarter’s figures, respectively.
CHH beat the consensus mark in three of the last four quarters and missed on the other occasion, with the average beat being 5.2%.
Insights into Estimate Revision Trend
For the upcoming quarter, the Zacks Consensus Estimate for earnings per share (EPS) has remained steady at $1.35 in the past seven days. The estimated figure indicates a 7.1% increase from $1.26 per share reported in the year-ago quarter.
The consensus mark for revenues is set at $369.8 million, signifying a 2.2% increase from the prior-year quarter’s reported figure.
Choice Hotels International, Inc. Price and EPS Surprise
Choice Hotels International, Inc. price-eps-surprise | Choice Hotels International, Inc. Quote
Let’s delve into the factors that are likely to be reflected in the company’s quarter-to-be-reported performance.
Key Factors to Consider
Choice Hotels’ fourth-quarter earnings and revenues are anticipated to grow year over year, driven by improving demand, expansion efforts, and enhancement of the mid-scale brand. The company’s focus on improving unit economics through a new digital registration capability is likely to have bolstered its performance in the to-be-reported quarter. The cost-effective cloud-based solution simplifies the hotel’s registration process, saving on labor costs, expediting check-ins, and enhancing the overall guest experience.
Robust Franchised and Managed Properties as well as Owned Hotels revenues are likely to have supported the company’s results. Per our model, fourth-quarter revenues from Franchised and Managed Properties and Platform and Procurement Services Fees are estimated to be $191.8 million and $17.2 million, respectively. Owned Hotels and Other Revenues are expected to increase year over year by 24.2% and 21.6% to $26.8 million and $16 million, respectively.
If inflation rates increase moderately, the company expects comparable or higher increases in hotel room rates. We anticipate Royalty, Licensing and Management Fees and Initial Franchise Fees to decline 5.8% and 1% year over year to $108.8 million and 6.4 million, respectively.
The surge in operating expenses is likely to have adversely impacted the company’s margin in the to-be-reported quarter. We expect total operating expenses to rise 7.9% year over year to $307.1 million.
Insights from the Zacks Model
Our proven model predictively suggests an earnings beat for Choice Hotels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) augments the odds of an earnings beat.
Earnings ESP: CHH has an Earnings ESP of +1.48%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model indicates that these have the right combination of factors to beat estimates this time around.
Six Flags Entertainment Corporation SIX has an Earnings ESP of +21.85% and a Zacks Rank of 2 at present.
SIX’s earnings for the to-be-reported quarter are expected to decrease by 15.6% from the previous year. It reported better-than-expected earnings in one of the trailing four quarters and missed on the other three occasions, with the average negative surprise being 9.3%.
Academy Sports and Outdoors, Inc. ASO has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
ASO’s earnings for the to-be-reported quarter are expected to increase by 13.2% from the previous year. It reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, with the average negative surprise being 4.7%.
Carnival Corporation & plc CCL has an Earnings ESP of +1.59% and a Zacks Rank of 2 at present.
CCL’s earnings for the to-be-reported quarter are expected to increase by 67.3% from the previous year. It reported better-than-expected earnings in all of the trailing four quarters, with the average positive surprise being 19.2%.
Stay updated on upcoming earnings announcements with the Zacks Earnings Calendar.
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