As the global economic recovery gains traction and tourism accelerates, entrenched companies in the hospitality industry should do well. A quite hospitable investment for the long journey is Wyndham Worldwide Corporation (NYSE:WYN), the world’s largest and most diverse hotel operator with roughly 7,500 hotels around the globe.
Wyndham Worldwide is the biggest player in the hospitality industry and its stock is trading at a surprisingly good value now.
Before the market’s opening bell this morning, Wyndham Worldwide reported adjusted fourth-quarter earnings of 90 cents per share of WYN stock, compared to 73 cents in the same period a year ago. Those numbers beat Wall Street’s forecast for EPS of 86 cents. Revenues gained 3% year-over-year to reach $1.2 billion for Q4, in line with analysts’ expectations.
Management gave guidance for full-year 2014 EPS in the range of $4.75 to $4.90, with revenue in the range of $5.45 billion to $5.5 billion.
Wyndham Worldwide provides a wide range of hospitality services and products to individual and business customers in the United States, the United Kingdom, and around the world. The parent company’s iconic brand names should be familiar to any vacationer or business road warrior: Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson and more.
Wyndham Worldwide’s vast network of integrated hotel chains affords the company economies of scale and global efficiencies. Moreover, the company’s diversity of offerings helps reduce its reliance on any single consumer sector; the company’s hotels have something to offer for budget and upscale travelers and everyone in-between. Moreover, the company’s portfolio of famous brands has generated deep-seated customer loyalty and name recognition.
The Rise of Tourism: A Boost for WYN Stock
Rising consumer and business confidence is creating a concomitant rise of tourism and corporate travel. At the same time, the aviation sector is in the midst of resurgence, as passenger demand grows more robust. In particular, a rising middle class in developing countries is generating newly affluent ranks of travel-hungry consumers, especially in Asia.
The precipitous drop in the price of energy over the past six months is another tailwind for the hospitality industry because it makes gasoline cheaper, consumers wealthier and air travel more affordable.
Managers are loosening their pursue strings and sending their people on trips again, while strong jobs generation and economic good times are making people more prone to go on vacation.
Over the past 12 months, Wyndham stock has has risen 15%. However, with a trailing 12-month price-to-earnings (P/E) ratio of 21.1, Wyndham stock is a bargain compared to the trailing P/E of 38.9 for its industry of lodging. Book some WYN stock for yourself while it’s still a value.
As of this writing, John Persinos did not hold a position in any of the aforementioned securities.
