Wyndham (WYN) Beats On Q1 Earnings, Lags Sales Marginally

Wyndham Worldwide Corporation (NYSE:WYN) posted mixed results for the first quarter of 2017, wherein earnings beat the Zacks Consensus Estimate while revenues marginally missed the same.

Earnings and Revenue Discussion

Adjusted earnings of $1.14 per share beat the Zacks Consensus Estimate of $1.11 by 2.7%. Also, earnings were up 1.8% year over year on the back of its share repurchase program.

Additionally, net revenues of $1.32 billion improved 1% year over year on the back of increased contribution from all of its segments. However, revenues slightly missed the Zacks Consensus Estimate of $1.33 billion by 0.8%.

Inside the Headline Numbers

Adjusted EBITDA (excluding share-based compensation expenses) decreased 4.5% year over year to $278 million.

Wyndham has been operating through its three operating segments: Hotel Group, Destination Network (formerly known as Vacation Exchange and Rentals) and Vacation Ownership.

Hotel Group revenues were $298 million, up 1% from the year-ago figure, which reflected higher franchise fees as well as growth in the company's Wyndham Rewards credit card program. The rise was partially offset by lower occupancy in Puerto Rico due to consumer concerns about the Zika virus.

Domestic same store RevPAR inched up 1.7%. At constant currency, total system-wide same store RevPAR increased 2.2% year over year.

Adjusted EBITDA increased 1% to $85 million. On a currency-neutral basis adjusted EBITDA grew 2%.

Revenues at Destination Network were $391 million, an increase of 1.6% from the year-ago figure. Meanwhile, at constant currency and excluding acquisitions, revenues recorded an improvement of 1%.

Exchange revenues inched up 0.6% to $183 million. The figure grew 0.8% at constant currency, as the exchange revenue per member rose 0.8% and average number of members declined 0.6%.

Vacation rental revenues were $184 million, reflecting 0.6% year-over-year growth. Likewise, at constant currency and excluding acquisitions, vacation rental revenues increased 1% driven by a 2.8% increase in transaction volumes, partially offset by a 2.0% decline in the average net price per rental.

Adjusted EBITDA decreased 2.9% to $102 million, reflecting the absence of a benefit of $3 million from business disruption claims received in the first quarter of 2016, as well as the unfavorable impact of the timing of the Easter holiday.

Revenues at Vacation Ownership increased 1.1% year over year to $648 million.

Gross VOI sales in the first quarter remained increased 3% year over year. Meanwhile, volume per guest (VPG) was up 4.9%,but tour flow declined 1.7% in the quarter. These results reflect closure of sales offices as part of a restructuring in the second half of last year.

Adjusted EBITDA decreased 8.8% to $124 million.

Wyndham Worldwide Corp Price, Consensus and EPS Surprise

2017 Guidance

For 2017, the company projects adjusted net income in a range of $631 million to $652 million, lower than its previous expectation of a range of $637 to $658 million. Additionally, adjusted earnings per share are anticipated in a band of $5.98 to $6.18, higher than the previously expected range of $5.90 to $6.10 per share. The upside in expectation reflects a lower share count due share due to possible share repurchases. The Zacks Consensus Estimate for 2017 earnings is currently pegged at $6.21 per share.

Wyndham continues to expect full-year revenues to roughly come in the range of $5.80–$5.95 billion. Adjusted EBITDA is still projected to be approximately in a band of $1.41 billion to $1.44 billion.

Zacks Rank & Stocks to Consider

Wyndham currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the broader Consumer Discretionary sector include:

Century Casinos, Inc.’s (NASDAQ:CNTY) current quarter and current year earnings estimates have risen 40% and 27.3% respectively, over the last 60 days. Century Casinos sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boyd Gaming Corporation (NYSE:BYD) is another Zacks Rank #1 company. Its current year and next year earnings estimates have moved up 1.8% and 1.5%, respectively, over the last 60 days.

Penn National Gaming, Inc. (NASDAQ:PENN) is a Zacks Rank #2 (Buy) company, whose earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 67.45%.

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