Despite the uncertain macroeconomic conditions, the travel industry’s long-term prospects look bright due to the sustained demand for leisure travel. Amid this backdrop, it could be wise to consider fundamentally strong travel stocks Airbnb, Inc. (ABNB), Travel + Leisure Co. (TNL), Playa Hotels & Resorts N.V. (PLYA), Bluegreen Vacations Holding Corporation (BVH), and The Marcus Corporation (MCS).
Before diving deeper into their fundamentals, let’s discuss what’s happening in the travel industry.
The travel industry faced challenges due to COVID-19, with lockdowns and health risks preventing travel. People saved money during the travel restrictions and now want to spend it on vacations and trips. This has led to a massive rebound in travel demand since last year.
According to the World Travel & Tourism Council (WTTC), the travel and tourism sector experienced significant growth despite challenges. In 2023, the industry is predicted to contribute $2.24 trillion to the US economy, surpassing its pre-pandemic record of $2.17 trillion in 2019.
With the use of social media at an ever-increasing rate, leisure travel is now seen as a symbol of social standing, leading to a surge in expenditure on leisure travel-related activities. The travel & tourism market revenue is expected to reach $855 billion in 2023 and grow at a CAGR of 4.4% to reach $1.02 trillion by 2027.
Now, let’s take a closer look at the fundamentals of the featured stocks.
Airbnb, Inc. (ABNB)
ABNB and its subsidiaries operate a platform enabling hosts to offer guests stays and experiences worldwide.
In terms of the trailing-12-month EBITDA margin, ABNB’s 21.75% is 102% higher than the 10.77% industry average. Likewise, its 25.31% trailing-12-month net income margin is 504.7% higher than the 4.19% industry average. Furthermore, its 82.33% trailing-12-month gross profit margin is 132.5% higher than the 35.41% industry average.
ABNB’s revenue for the fiscal second quarter that ended June 30, 2023, increased 18.1% year-over-year to $2.48 billion. Its income from operations rose 41.7% year-over-year to $523 million.
Additionally, the company’s net income and EPS increased 71.5% and 75% year-over-year to $650 million and $0.98, respectively. Also, its adjusted EBITDA increased 15.2% year-over-year to $819 million.
Analysts expect ABNB’s EPS and revenue for the quarter ending September 30, 2023, to increase 16.7% and 16.6% year-over-year to $2.09 and $3.36 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 49.7% year-to-date to close the last trading session at $127.99.
ABNB’s POWR Ratings are consistent with this robust outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B for Momentum. It is ranked #14 out of 22 stocks in the B-rated Travel - Hotels/Resorts industry. To see ABNB’s Growth, Value, Stability, and Sentiment ratings, click here.
Travel + Leisure Co. (TNL)
TNL and its subsidiaries provide hospitality services and products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership.
In terms of the trailing-12-month EBIT margin, TNL’s 19.15% is 163.3% higher than the 7.28% industry average. Likewise, its 9.90% trailing-12-month net income margin is 136.7% higher than the 4.19% industry average. Furthermore, its 48.24% trailing-12-month gross profit margin is 36.2% higher than the 35.41% industry average.
For the second quarter ended June 30, 2023, TNL’s net revenues increased 2.9% year-over-year to $949 million. Its adjusted net income came in at $100 million. The company’s adjusted EBITDA rose 2.6% year-over-year to $236 million. Additionally, its adjusted EPS came in at $1.33, representing an increase of 4.7% year-over-year.
Street expects TNL’s EPS and revenue for the quarter ending September 30, 2023, to increase 17.8% and 5.4% year-over-year to $1.51 and $987.41 million, respectively. It surpassed the Street EPS estimates in three of the trailing four quarters. The stock has gained 9.2% year-to-date to close the last trading session at $39.73.
TNL’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked #7 in the same industry. It has a B grade for Value, Momentum, and Quality. In addition to the POWR Ratings grades I’ve just highlighted, you can see TNL’s ratings for Growth, Stability, and Sentiment here.
Playa Hotels & Resorts N.V. (PLYA)
PLYA and its subsidiaries own, develop, and operate resorts in prime beachfront locations in Mexico and the Caribbean.
On March 13, 2023, PLYA announced they would manage a new Wyndham Alltra resort in the Dominican Republic, with 404 rooms in Samaná. It will be rebranded as Wyndham Alltra Samaná, targeting all ages, and is set to open in Q3 2023. This is the fourth Wyndham Alltra resort managed by PLYA, showcasing the brand's success since its launch in 2021.
In terms of the trailing-12-month EBIT margin, PLYA’s 16.19% is 122.5% higher than the 7.28% industry average. Likewise, its 7.42% trailing-12-month levered FCF margin is 54.1% higher than the 4.81% industry average. Furthermore, its 24.59% trailing-12-month EBITDA margin is 128.4% higher than the 10.77% industry average.
PLYA’s total net revenues for the second quarter ended June 30, 2023, increased 11.5% year-over-year to $238.76 million. Its adjusted net income came in at $21.01 million. Its adjusted EBITDA rose 16.9% year-over-year to $72.12 million. Additionally, its adjusted EPS came in at $0.13.
For the quarter ending March 31, 2024, PLYA’s EPS is expected to increase 9.6% year-over-year to $0.34. Its revenue for the quarter ending September 30, 2023, is expected to increase 2.5% year-over-year to $209.80 million. Over the past nine months, the stock has gained 20.8% to close the last trading session at $7.20.
It has a B grade for Value, Momentum, and Quality. It is ranked #9 in the Travel - Hotels/Resorts industry. In addition to the POWR Ratings grades I’ve just highlighted, you can see the PLYA ratings for Growth, Stability, and Sentiment here.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. The company markets and sells vacation ownership interests (VOI); and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, and New Orleans, and others.
On May 16, 2023, BVH announced its expansion into Nashville by acquiring two properties in Printers Alley. They'll renovate the 15-story hotel into vacation ownership units and convert another building for sales. They're also expanding presidential suites in different resorts.
In terms of the trailing-12-month EBITDA margin, BVH’s 30.95% is 187.5% higher than the 10.77% industry average. Likewise, its 87.40% trailing-12-month gross profit margin is 146.8% higher than the 35.41% industry average. Furthermore, its 28.90% trailing-12-month EBIT margin is 297.2% higher than the 7.28% industry average.
BVH’s total revenue for the second quarter that ended June 30, 2023, increased 10.6% year-over-year to $260.62 million. The company’s net income attributable to shareholders rose 23.2% year-over-year to $21.91 million. Its EPS came in at $1.34, representing an increase of 54% year-over-year. Also, its adjusted EBITDA increased 16.8% over the prior-year quarter to $45.31 million.
Street expects BVH’s EPS and revenue for the quarter ending September 30, 2023, to increase 12.6% and 3.4% year-over-year to $1.35 and $259.30 million, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 73.7% to close the last trading session at $35.39.
BVH’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Value, Momentum, and Quality. It is ranked #2 in the Travel - Hotels/Resorts industry. Click here to see the additional POWR Ratings for BVH (Growth and Stability).
The Marcus Corporation (MCS)
MCS owns and operates movie theatres, hotels, and resorts in the United States. The company's Theatres segment operates multiscreen motion picture theatres and Funset Boulevard, a family entertainment centre under the Big Screen Bistro, Big Screen Bistro Express, BistroPlex, and Movie Tavern by Marcus brand names.
In terms of the trailing-12-month Capex/Sales, MCS’s 5.44% is 35.4% higher than the 4.02% industry average. Likewise, its 0.60x trailing-12-month asset turnover ratio is 23.6% higher than the 0.48x industry average.
For the fiscal second quarter ended June 29, 2023, MCS’ total revenue increased 4.3% year-over-year to $207 million. The company’s operating income increased 10.1% year-over-year to $20.81 million. Also, its net earnings rose 50.3% year-over-year to $13.47 million.
Its EPS came in at $0.35, representing an increase of 45.8% year-over-year. In addition, its adjusted EBITDA increased 3.7% over the prior-year quarter to $38.70 million.
For the quarter ending September 30, 2023, analysts expect MCS’s EPS and revenue to increase 95% and 0.2% year-over-year to $0.20 and $183.95 million, respectively. The stock has gained 12.2% to close the last trading session at $16.13.
It's no surprise that MCS has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B grade for Growth, Momentum, and Quality. It is ranked #5 in the same industry. To see the additional ratings of MCS for Value, Stability, and Sentiment, click here.
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ABNB shares were trading at $125.42 per share on Friday afternoon, down $2.57 (-2.01%). Year-to-date, ABNB has gained 46.69%, versus a 14.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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