On Feb 20, 2015 Maryland based Choice Hotels International Inc. (CHH, Financial) declared $25.3 Million profit for its fourth quarter ended Dec. 31, 2014. The company has exceeded the street forecast and expectations.
Quarter Four specific figures
The total revenue figure for this quarter stood at $185.4 million. Franchising revenues for Q4 stood at $81.4 million which is a rise of 12% as compared to the same quarter in 2013. EBIDTA from franchising revenues for this quarter stood at $52.7 million, up by 15% as compared to the Q4, 2013 figure. Franchising margins stood at 62.1%, a jump of 150 basis points from the quarter last year. Choice raked in $59.2 million in Domestic Royalty Fee which is again an increase of 11% from last year’s quarter. An increase in the average daily room rate and occupancy numbers led to 11.2% increase in the Domestic systemwide revenue per available room (RevPAR). This was a rise of 370 basis points and 3.8% and from Q4, 2013. The diluted EPS totaled to $0.43 for this quarter.
Non-Monetary Quarter Four figures
- Choice witnessed a 25% increase in the number of new franchise agreements entered in Q4, 2013. The total tally stood at 269 agreements
- There was a 78% jump in the number of the domestic new construction hotel franchise agreements as compared to the same quarter last year
Annual figures
For the entire year the revenue figure for Choice stood at $758 million and the total profit stood at $123.2 million. EBITDA from franchising activities for the complete year stood at $240 million which is an increase of 12% from 2013’s annual figure. The company raked in $344.8 million in franchising revenues. This is a 9% increase of $27.8 million as compared to 2013. Choice registered $260 million in Domestic Royalty Fees for 2014, an 8% rise from 2013 figure. Diluted EPS figure stood at $2.07 which is an 8% increment from the figure in 2013. The annual RevPar for domestic market increased by 8.5%, which is an increase by 310 basis points and 3% since last year.
Non-monetary annual figures
- The total tally for new units added to its domestic inventory stood at 566 which is a 7% increase from 2013
- The under-construction units or yet to take-off projects in the domestic market increased by 21% in comparison to 2013
- 336 contracts underwent relicensing or renewal in 2014. Again a jump of 16% from last year
Other important news
Choice purchased 1 million shares of common stock under its current repurchase program in the fourth quarter of 2014. The board has approved and authorized the share repurchase under the current repurchase programme by 3 million shares.
About the stock
The stock price has risen more than 30% in the past one year. Based on the Q4 results, the company is expecting the EPS figure for the entire year to be somewhere around $2.14 - $2.21.
About the company
Choice Hotels International Inc. is a Rockville, Maryland-based hospitality corporation which owns hotels and motel brands. Some of the brands under its umbrella are: Comfort Inn, Comfort Suites, Quality Inn, Sleep Inn, Clarion, Cambria Hotels & Suites, Mainstay Suites, Suburban Extended Stay, Econo Lodge, Rodeway Inn and Ascend Hotel Collection.
Competition
Some of the competitors in the U.S. domestic market are Marriott International Inc. (MAR, Financial), Hyatt Hotels Corporation (H, Financial), Intercontinental Hotels Group Plc. (IHG, Financial) and Wyndham Worldwide Corporation (WYN, Financial).
Summary
Choice has exceeded the market expectations and proved to be a safe stock. The volumes are expected to go up in the next few months. Based on the impressive performance of the stock in 2014, it would be a "Hold" or "Buy" recommendation.
