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Choice Hotels
(NYSE:CHH)
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Rating:60Neutral
Price Target:
$119.00
â–²(7.94% Upside)
Action:Reiterated
Date:09/06/26
CHH scores as a balanced but risk-aware setup: strong margins and supportive (though recently softer) cash generation are weighed down by very high balance-sheet leverage. Near-term technical signals are notably weak, while valuation is reasonable and the latest earnings call was constructive due to raised guidance and improving unit-growth trajectory despite cash flow and investment timing headwinds.
Positive Factors
Asset-Light Franchising
Choice’s asset-light franchising model limits direct exposure to hotel real-estate ownership while generating recurring fees from franchisees. Brand standards, marketing, distribution, technology, and loyalty services can scale across rooms without requiring equivalent property investment, supporting durable capital efficiency.
Negative Factors
High Financial Leverage
The very high debt burden and thin equity cushion leave Choice financially sensitive to weaker hotel demand or lower franchisee revenues. Significant leverage can constrain investment and capital allocation, while interest obligations reduce flexibility even though the company continues to generate positive cash flow.
Read all positive and negative factors
Positive Factors
Negative Factors
Asset-Light Franchising
Choice’s asset-light franchising model limits direct exposure to hotel real-estate ownership while generating recurring fees from franchisees. Brand standards, marketing, distribution, technology, and loyalty services can scale across rooms without requiring equivalent property investment, supporting durable capital efficiency.
Read all positive factors
Choice Hotels Key Performance Indicators (KPIs)
Any
Average Daily Rate Breakdown
Reveals the average income earned per occupied room, providing insight into pricing strategy effectiveness and market positioning.
Reveals the average income earned per occupied room, providing insight into pricing strategy effectiveness and market positioning.
Data provided by:
The Fly
The FlyChoice Hotels (CHH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.90B
Dividend Yield1.06%
Average Volume (3M)570.30K
Price to Earnings (P/E)15.3
Beta (1Y)0.57
Revenue Growth2.65%
EPS Growth8.53%
CountryUS
Employees1,754
SectorConsumer Cyclical
Sector Strength84
IndustryTravel Lodging
Share Statistics
EPS (TTM)7.13
Shares Outstanding45,008,620
10 Day Avg. Volume547,270
30 Day Avg. Volume570,298
Financial Highlights & Ratios
PEG Ratio0.44
Price to Book (P/B)24.27
Price to Sales (P/S)2.75
P/FCF Ratio35.28
Enterprise Value/Market Cap1.44
Enterprise Value/Revenue4.37
Enterprise Value/Gross Profit9.71
Enterprise Value/Ebitda11.52
Forecast
1Y Price Target
$113.92Price Target Upside3.33% Upside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)7.01
Revenue Forecast (FY)$1.63B
Choice Hotels Business Overview & Revenue Model
Company Description
Choice Hotels International, Inc., also known as Choice Hotels, operates as a prominent global hotel franchisor, conducting its extensive business through its various subsidiary entities. The company's activities are primarily divided into two mai...
How the Company Makes Money
Choice Hotels primarily makes money through an asset-light franchising and brand services model, earning fees and other revenue from independent hotel owners that operate properties under Choice-branded flags.
Key revenue streams include:
1) Fran...
Choice Hotels Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 02, 2026
Earnings Call Sentiment Positive
The call highlighted clear operational progress: improving net rooms growth trajectory (notably conversion-led openings and sharply lower exits), modest RevPAR recovery, meaningful traction from loyalty and AI-enabled commercial tools, and disciplined capital allocation that reduced development outlays 80% year-to-date. Management raised several full-year targets (EBITDA, RevPAR, royalty rate, net rooms growth) and demonstrated returning capital to shareholders. Key near-term challenges include weaker operating cash flow, elevated reimbursable deficits tied to temporary investments, higher SG&A/reserves, pipeline visibility nuances due to conversion velocity, and timing/market risk around monetizing owned assets. On balance, improvements in core operating metrics and upgraded guidance outweigh the listed financial and timing headwinds.Positive Updates
Adjusted EBITDA Growth and Upgraded Full-Year Outlook
Q2 adjusted EBITDA increased 6% year-over-year to $175 million; company raised full-year 2026 adjusted EBITDA guidance to $635 million–$650 million, citing stronger U.S. RevPAR, improved global net rooms growth and royalty rate expansion.
Negative Updates
Operating Cash Flow Decline
Operating cash flow for the first six months was $67 million versus $116 million in the prior-year period, primarily due to higher franchise agreement acquisition costs (driven by increased openings) and higher marketing/reservation reimbursable expenses.
Read all updates
Q2-2026 Updates
Positive
Negative
Adjusted EBITDA Growth and Upgraded Full-Year Outlook
Q2 adjusted EBITDA increased 6% year-over-year to $175 million; company raised full-year 2026 adjusted EBITDA guidance to $635 million–$650 million, citing stronger U.S. RevPAR, improved global net rooms growth and royalty rate expansion.
Read all positive updates
Company Guidance
Choice raised full‑year 2026 guidance, now expecting adjusted EBITDA of $635–$650M and adjusted diluted EPS of $6.86–$7.10, with U.S. RevPAR growth of 0%–1.25% and global RevPAR growth of 0%–1%; they forecast U.S. average royalty rate expansion of 7–9 basis points and global net rooms growth of ~1.5% (up from ~1%), and continue to expect positive U.S. net rooms growth for the year with a ~250 bps improvement in the U.S. net exit rate versus last year. Management said Q3 U.S. RevPAR should exceed Q2 before moderating in Q4, Q3 U.S. net rooms growth should be broadly consistent with Q2 with a more meaningful step‑up in Q4, and the year‑to‑date first half saw hotel development outlays decline ~80% (expected ~70% for the full year). They project mid‑single‑digit adjusted SG&A growth, reiterated $175–$225M in share repurchases (YTD returned $172M, including $133M repurchases and $39M dividends), and closed the quarter with $475M liquidity and 3.1x net leverage; note a prior‑year $9.5M liquidated damages item will not recur and key‑money outlays are expected to be ~$15–$20M higher than earlier modeled.Choice Hotels Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
34
Negative
Cash Flow
56
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.62B | 1.60B | 1.58B | 1.54B | 1.40B | 1.07B |
| Gross Profit | 728.27M | 653.86M | 744.17M | 690.28M | 700.05M | 599.60M |
| EBITDA | 613.75M | 564.86M | 553.64M | 476.47M | 544.52M | 473.67M |
| Net Income | 328.06M | 369.95M | 299.67M | 258.51M | 332.15M | 288.96M |
Balance Sheet | ||||||
| Total Assets | 2.99B | 2.92B | 2.53B | 2.39B | 2.10B | 1.93B |
| Cash, Cash Equivalents and Short-Term Investments | 42.83M | 45.00M | 40.18M | 26.75M | 41.57M | 511.61M |
| Total Debt | 2.11B | 2.13B | 1.89B | 1.68B | 1.29B | 1.11B |
| Total Liabilities | 2.85B | 2.74B | 2.58B | 2.36B | 1.95B | 1.67B |
| Stockholders Equity | 142.18M | 181.23M | -45.27M | 35.60M | 154.66M | 265.88M |
Cash Flow | ||||||
| Free Cash Flow | 221.74M | 124.65M | 173.55M | 178.26M | 277.11M | 305.83M |
| Operating Cash Flow | 221.74M | 270.45M | 319.40M | 296.55M | 367.06M | 383.70M |
| Investing Cash Flow | -157.14M | -218.26M | -84.57M | -265.63M | -442.43M | -78.93M |
| Financing Cash Flow | -82.05M | -50.10M | -221.71M | -45.94M | -394.15M | -27.72M |
Choice Hotels Technical Analysis
Positive
110.25
Price Trends
103.82
Positive
106.52
Positive
106.41
Positive
Market Momentum
2.28
Negative
57.18
Neutral
57.83
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 110.25 is above the 20-day moving average (MA) of 105.98, above the 50-day MA of 103.82, and above the 200-day MA of 106.41, indicating a bullish trend. The MACD of 2.28 indicates Negative momentum. The RSI at 57.18 is Neutral, neither overbought nor oversold. The STOCH value of 57.83 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 33 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $79.20B | 51.15 | -28.13% | 0.17% | 8.74% | 4.50% | |
65 Neutral | $24.43B | 35.27 | -25.04% | 1.14% | 3.41% | -1.33% | |
65 Neutral | $5.31B | 26.68 | 43.21% | 2.33% | 0.70% | -38.03% | |
62 Neutral | $102.94B | 41.12 | -66.73% | 0.71% | 4.72% | 8.81% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $4.90B | 15.28 | 214.91% | 1.06% | 2.65% | 8.53% | |
56 Neutral | $16.23B | 199.95 | 2.37% | 0.35% | 6.36% | -80.55% |
* Consumer Cyclical Sector Average
CHH
Choice Hotels
109.19
15.10
16.05%
H
Hyatt Hotels
172.97
29.13
20.25%
IHG
Intercontinental Hotels Group
166.09
43.43
35.41%
MAR
Marriott International
390.23
126.97
48.23%
HLT
Hilton Worldwide Holdings
344.65
84.26
32.36%
WH
Wyndham Hotels & Resorts
72.95
2.18
3.08%
Choice Hotels Corporate Events
Business Operations and StrategyExecutive/Board Changes
Choice Hotels Announces Transition of Chief Human Resources Officer
Neutral
Oct 1, 2026
On September 29, 2026, Choice Hotels International, Inc. announced that Chief Human Resources Officer Patrick Cimerola will transition out of his CHRO role at the end of 2026. Effective January 1, 2027, he will remain with the company as a special...
Business Operations and StrategyExecutive/Board Changes
Choice Hotels Names Dominic Dragisich Permanent CEO and Director
Positive
Aug 31, 2026
On August 30–31, 2026, Choice Hotels International’s board appointed Dominic E. Dragisich as president, chief executive officer and director, following his tenure as interim CEO since May 20, 2026. His elevation coincided with the resi...
Business Operations and StrategyPrivate Placements and Financing
Choice Hotels Secures New $500 Million Credit Facility
Positive
Aug 28, 2026
On August 28, 2026, Choice Hotels entered into a new unsecured credit agreement for a $500 million term loan maturing on August 28, 2029, with an optional one-year extension subject to lender consent, and the facility allows the company to choose ...
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.