Wyndham Hotels stock is the IBD Stock Of The Day as the hotel chain operator closed near a buy point Tuesday, then reporting booming earnings after the close. Travel and leisure stocks rose broadly Tuesday, with several in or near buy zones, amid signs that Covid-19 is on the wane.
Wyndham Hotels & Resorts has a strong track record of earnings beats. The Parsippany, N.J.-based company reports for the December quarter after the close. Rival Marriott International smashed Q4 earnings views early Tuesday, with its stock moving higher in the buy zone.
Founded in 1990, Wyndham Hotels runs the value Days Inn and Travelodge brands, as well as the upscale Dolce and Wyndham brands.
The company offers long-term franchise agreements and provides hotel management services.
A key metric — revenue per available room, or RevPAR — is on the rebound. In the U.S., RevPAR grew 59% in Q3 vs. the year-ago quarter, exceeding pre-pandemic 2019 levels by 7%.
Leisure and travel stocks rallied broadly Tuesday, including hotel operators, cruise lines and airlines. Several more states, including California, are preparing to end mask mandates. New U.S. Covid-19 cases have been plunged since mid-January.
In 2020, the coronavirus pandemic slammed earnings for travel and hotel companies.
Online travel website Expedia popped 6.1% Tuesday. Shares are now extended from a recent breakout. Expedia stock is on the IBD Leaderboard, a curated list of stocks with the most potential for big gains.
Investors should be very cautious about any stock buys in the current volatile market. But it's a good time to build watchlists.
Wyndham Earnings
Wyndham earnings vaulted 886% to 69 cents per share. Revenue surged 32% to $392 million. U.S. Revenue per available room, or RevPAR, for the quarter exceeded 2019 levels by 9%, growing 58% vs. 2020.
Wyndham Hotels Stock Technical Analysis
WH stock fell 1.4% overnight. Keep in mind, shares of Wyndham Hotels climbed 4.55% to 90.29 on the stock market today heading into results. Wyndham Hotels stock is just below a 91.51 buy point from a flat base and above the 50-day line.
Investors can now wait to see if WH stock breaks out. They could have used an earnings option trade heading into results to take advantage of any Wyndham stock upside while capping the downside risk.
The relative strength line hit a new high Tuesday, a bullish sign ahead of a potential breakout. The RS line for WH stock is now at its highest level since the coronavirus pandemic began.
Among other hotel stocks Tuesday, Marriott rose 5.8% to 181.20, moving out of buy range. Marriott stock first cleared a 171.25 cup-with-handle buy point on Feb. 8 and regained it Monday. Marriott stock extended gains Tuesday as Q4 earnings crushed views. Revenue more than doubled last quarter despite the Covid omicron variant, as the pandemic rebound continues.
Hyatt Hotels popped 8.2% to 106.12 on Tuesday, running through a buy zone. Hyatt Hotels stock cleared a 99.10 alternate entry, a dime above the Jan. 10 high, in intraday trade. Hilton Worldwide advanced 4.3% and Choice Hotels added 3.2%, with both hotel stocks near entries.
Wyndham stock's IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is a near-perfect 98. Its Relative Strength Rating is a strong 92 out of a possible 99. That means it has outperformed 92% of all stocks in the past year.
WYN stock boasts growing institutional support, with 631 funds owning shares as of December, up from 594 in March.
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Earnings And Fundamentals
The hotel stock sports a solid EPS Rating of 80 out of 99. Wyndham Hotels began its earnings rebound in Q2 2021 and built on the recovery in Q3.
On a per-share basis, Wyndham earnings vaulted 222% year over year in Q3, though slowing from an 850% gain the prior quarter. The company raised its full-year 2021 outlook after smashing Q3 earnings views.
"These results have been fueled by the many investments we made over the last two years to capture an increasing share of both leisure and everyday business travel," said Wyndham CEO Geoffrey Ballotti.
For the full year, Wall Street expects Wyndham earnings per share to almost triple as sales increase 20%, according to FactSet.
Both earnings and sales are expected to grow further in 2022, though slowing from 2021's pace. They fell sharply in 2020 due to pandemic lockdowns and travel curbs.
The company has been on a room-opening spree. It also launched an upper-midscale brand, called Alltra, targeting vacation travelers.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
