Choice Hotels (CHH) AI Stock Analysis

• Market Cap: $4.27B
• Dividend Yield: 1.24%
• Average Volume (3M): 501.03K
• Price to Earnings (P/E): 14.2
• Beta (1Y): 0.59
• Revenue Growth: 1.67%
• EPS Growth: 35.34%
• Country: US
• Employees: 1,695
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Travel Lodging
• EPS (TTM): 1.92
• Shares Outstanding: 46,268,375
• 10 Day Avg. Volume: 495,115
• 30 Day Avg. Volume: 501,031
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.84
• Enterprise Value/Revenue: 4.99
• Enterprise Value/Gross Profit: 9.52
• Enterprise Value/Ebitda: 14.35
• 1Y Price Target: $113.80
• Price Target Upside: 23.20% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 7

• Rating: 59 Neutral
• Price Target: $125.00 ▲(35.33% Upside)

Choice Hotels' overall score reflects a mixed financial position with strong profitability but significant leverage risks. Technical indicators suggest bearish momentum, while valuation remains reasonable. The earnings call provided a balanced view with strategic growth initiatives offset by RevPAR challenges.

Positive Factors

International Expansion

Choice Hotels' international expansion, with a 10% EBITDA growth and 5% room portfolio increase, strengthens its global market position and diversifies revenue streams, supporting long-term growth.

Extended Stay Segment Growth

The robust growth in the extended stay segment, with a 20% increase over five years, enhances Choice Hotels' market presence in a high-demand area, providing stable revenue opportunities.

Strategic Acquisitions

Strategic acquisitions, such as the full acquisition of Choice Hotels Canada, bolster the company's direct control and growth potential in key markets, enhancing competitive advantage.

Negative Factors

High Financial Leverage

High financial leverage, indicated by negative equity, poses risks to financial stability and limits flexibility for future investments, potentially impacting long-term growth.

Reduced RevPAR Expectations

Lower RevPAR expectations reflect challenges in demand, which could pressure revenue growth and profitability, affecting the company's ability to meet financial targets.

Radisson Brand Underperformance

Exiting underperforming Radisson properties indicates challenges in brand performance, potentially impacting net unit growth and overall brand strength in the market.

Choice Hotels Business Overview & Revenue Model

Company Description

Choice Hotels International, Inc. (CHH) is a leading hotel franchisor that operates a global portfolio of over 7,000 hotels across more than 40 countries. The company primarily focuses on the midscale and economy segments of the lodging industry, offering a diverse range of brands such as Comfort Inn, Quality Inn, Clarion, and Econo Lodge. Choice Hotels provides essential services to franchisees, including marketing, reservation systems, and operational support, enabling them to effectively serve their guests while maintaining brand standards.

How the Company Makes Money

Choice Hotels generates revenue primarily through its franchising model. The company earns money by charging franchisees initial franchise fees and ongoing royalty fees, which are typically a percentage of the hotel’s revenue. In addition to these fees, Choice Hotels also profits from various ancillary services, such as marketing and technology services that they provide to their franchisees. The company has established significant partnerships with various travel industry players, including online travel agencies (OTAs) and loyalty programs, which enhance its market reach and customer acquisition. Furthermore, the company's emphasis on loyalty programs, such as Choice Privileges, encourages repeat business, contributing to its overall revenue growth.

Choice Hotels Financial Statement Overview

Summary

Choice Hotels shows a mixed financial position. Strong profitability metrics are overshadowed by negative revenue growth and high leverage. The cash flow situation is improving, but the balance sheet's negative equity and high debt levels are concerning.

Income Statement

Choice Hotels shows a mixed performance in its income statement. The company has maintained a relatively stable gross profit margin around 48% in the TTM, indicating effective cost management. However, the revenue growth rate has turned negative in the TTM, reflecting a potential decline in sales. The net profit margin remains healthy at approximately 19.75%, suggesting profitability, but the declining revenue growth is a concern.

Balance Sheet

The balance sheet reveals significant financial leverage with a negative stockholders' equity, leading to a concerning debt-to-equity ratio. The negative return on equity in the TTM indicates that the company is not generating sufficient returns on its equity base. The equity ratio is also negative, highlighting potential financial instability.

Cash Flow

Cash flow analysis shows a positive trend with a 39.2% growth in free cash flow in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is below 1, suggesting that not all net income is being converted into cash, which could be a risk if it persists. However, the free cash flow to net income ratio is over 50%, indicating decent cash flow relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.58B	1.58B	1.54B	1.40B	1.07B	774.07M
Gross Profit	826.36M	744.17M	690.28M	700.05M	599.60M	311.16M
EBITDA	547.89M	553.64M	440.39M	511.03M	447.94M	127.86M
Net Income	307.79M	299.67M	258.51M	332.15M	288.96M	75.39M
Balance Sheet
Total Assets	2.66B	2.53B	2.39B	2.10B	1.93B	1.59B
Cash, Cash Equivalents and Short-Term Investments	58.61M	40.18M	26.75M	41.57M	511.61M	234.78M
Total Debt	2.01B	1.89B	1.68B	1.29B	1.11B	1.08B
Total Liabilities	2.69B	2.58B	2.36B	1.95B	1.67B	1.59B
Stockholders Equity	-26.24M	-45.27M	35.60M	154.66M	265.88M	-5.75M
Cash Flow
Free Cash Flow	251.27M	173.55M	178.26M	273.48M	305.83M	75.10M
Operating Cash Flow	321.88M	319.40M	296.55M	367.06M	383.70M	115.05M
Investing Cash Flow	-117.69M	-84.57M	-265.63M	-442.43M	-78.93M	-29.47M
Financing Cash Flow	-206.38M	-221.71M	-45.94M	-394.15M	-27.72M	115.40M

Choice Hotels Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 92.37
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHH, the sentiment is Negative. The current price of 92.37 is below the 20-day moving average (MA) of 98.23, below the 50-day MA of 106.53, and below the 200-day MA of 125.31, indicating a bearish trend. The MACD of -3.85 indicates Positive momentum. The RSI at 27.39 is Positive, neither overbought nor oversold. The STOCH value of 7.97 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHH.

Choice Hotels Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HTHT	―	$11.66B	24.66	30.38%	4.49%	4.43%	1.61%
ATAT	―	$5.38B	28.38	46.30%	2.11%	37.98%	32.17%
WH	―	$5.55B	16.91	57.98%	2.17%	3.38%	38.04%
H	―	$13.10B	32.37	11.66%	0.44%	0.74%	-54.42%
Sector *	―	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
IHG	―	$18.47B	25.50	―	1.41%	8.89%	23.20%
CHH	―	$4.27B	14.17	―	1.24%	1.67%	35.34%

Choice Hotels Corporate Events

Choice Hotels Reports Strong Q2 2025 Performance

Choice Hotels International, Inc. is a prominent global lodging franchisor with a diverse portfolio of 22 brands, catering to various market segments from upscale to economy, and operates nearly 7,500 hotels worldwide.

Choice Hotels’ Earnings Call: Growth Amid Challenges

The recent earnings call for Choice Hotels International presented a balanced sentiment, showcasing the company’s achievements in international expansion and strategic acquisitions, while acknowledging challenges in domestic RevPAR performance and macroeconomic uncertainties. This equilibrium between growth and challenges was a central theme throughout the discussion.