Choice Hotels International Inc /De (NYSE: CHH)

Sector: Consumer Cyclical Industry: Lodging CIK: 0001046311
Market Cap 6.15 Bn
P/B -50.16
P/E 28.50
P/S 5.74
ROIC (Qtr) 19.11
Div Yield % 1.04
Rev 1y % (Qtr) 4.53
Total Debt (Qtr) 2.03 Bn
Debt/Equity (Qtr) 13.54
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About

Investment thesis

Bull case

  • Robust free cash flow of 176.39M exceeds capital expenditure of 91.23M by 1.93x, indicating strong organic growth funding capability.
  • Tangible assets of 1.56B provide exceptional 6.38x coverage of deferred revenue 244.07M, showing strong service capability backing.
  • Operating cash flow of 267.62M fully covers other non-current liabilities 16.86M by 15.87x, showing strong long-term stability.
  • Tangible assets of 1.56B provide robust 4.96x coverage of other current liabilities 314.32M, indicating strong asset backing.
  • Operating cash flow of 267.62M provides strong 11.68x coverage of tax liabilities 22.91M, showing excellent fiscal position.

Bear case

  • Operating cash flow of 267.62M barely covers its investment activities of (199.06M), with a coverage ratio of -1.34, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 267.62M provides thin coverage of dividend payments of (53.20M) with a -5.03 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 52.58M provide limited coverage of acquisition spending of (123.86M), which is -0.42x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 267.62M provides insufficient coverage of deferred revenue obligations of 244.07M, which is 1.10x, raising concerns about future service delivery capabilities.
  • High financing cash flow of (76.47M) relative to working capital of (18.20M), which is 4.20x suggests concerning dependence on external funding for operational needs.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Lodging
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MAR Marriott International Inc /Md/ 98.24 Bn 37.77 3.75 17.08 Bn
2 HLT Hilton Worldwide Holdings Inc. 74.93 Bn 51.43 6.22 13.09 Bn
3 HTHT H World Group Ltd 16.57 Bn 29.82 4.76 5.22 Bn
4 H Hyatt Hotels Corp 16.03 Bn -308.35 2.26 4.56 Bn
5 WH Wyndham Hotels & Resorts, Inc. 7.74 Bn 49.28 3.77 2.63 Bn
6 CHH Choice Hotels International Inc /De 6.15 Bn 28.50 5.74 2.03 Bn
7 ATAT Atour Lifestyle Holdings Ltd 5.47 Bn 31.48 5.16 0.23 Bn
8 CVEO Civeo Corp 0.40 Bn -13.95 0.64 0.20 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.39 1.88
EV to Cash from Ops. EV/CFO 25.12 35.03
EV to Debt EV to Debt 3.43 3.56
EV to EBIT EV/EBIT 21.83 8.28
EV to EBITDA EV/EBITDA 19.97 15.04
EV to Free Cash Flow [EV/FCF] EV/FCF 32.95 42.92
EV to Market Cap EV to Market Cap 1.13 0.84
EV to Revenue EV/Rev 6.48 0.57
Price to Book Value [P/B] P/B -50.16 -4.94
Price to Earnings [P/E] P/E 28.50 -9.64
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 7.18 1.70
Dividend Payout Ratio % Div Payout % (Qtr) 14.00 7.38
Dividend per Basic Share Div per Share (Qtr) 1.15 0.85
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.25 7.54
Interest Coverage Int. cover (Qtr) 6.43 -155,266.31
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 39.07 -4.84
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -10.21 122.26
Dividend Growth (1y) % Div 1y % (Qtr) 0.26 -2.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 42.84 -107.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 19.28 3.84
EBIT Growth (1y) % EBIT 1y % (Qtr) 37.92 12.05
EBT Growth (1y) % EBT 1y % (Qtr) 45.92 2.05
EPS Growth (1y) % EPS 1y % (Qtr) 55.39 -10.22
FCF Growth (1y) % FCF 1y % (Qtr) 29.54 -17.22
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.36 5.20
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.55 0.47
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.13
Cash Ratio Cash Ratio (Qtr) 0.11 0.54
Current Ratio Curr Ratio (Qtr) 0.96 1.20
Debt to Equity Ratio Debt/Equity (Qtr) 13.54 1.44
Interest Cover Ratio Int Coverage (Qtr) 6.43 -155,266.31
Times Interest Earned Times Interest Earned (Qtr) 6.43 -155,266.31
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 40.40 -228.61
EBIT Margin % EBIT Margin % (Qtr) 35.68 -214.73
EBT Margin % EBT Margin % (Qtr) 30.13 -246.57
Gross Margin % Gross Margin % (Qtr) 51.50 36.71
Net Profit Margin % Net Margin % (Qtr) 23.90 -250.50