Wyndham Hotels & Resorts, Inc. (NYSE:WH) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall – although revenues of US$1.5b were in line with what the analysts predicted, Wyndham Hotels & Resorts surprised by delivering a statutory profit of US$3.91 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Wyndham Hotels & Resorts’ seven analysts currently expect revenues in 2023 to be US$1.52b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 8.4% to US$3.68 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.48b and earnings per share (EPS) of US$3.67 in 2023. So it looks like there’s been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
It may not be a surprise to see thatthe analysts have reconfirmed their price target of US$88.44, implying that the uplift in sales is not expected to greatly contribute to Wyndham Hotels & Resorts’s valuation in the near term. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Wyndham Hotels & Resorts analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$82.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Wyndham Hotels & Resorts’ revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2023 being well below the historical 2.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it’s pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Wyndham Hotels & Resorts.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Wyndham Hotels & Resorts going out to 2025, and you can see them free on our platform here.
Even so, be aware that Wyndham Hotels & Resorts is showing 3 warning signs in our investment analysis , and 1 of those shouldn’t be ignored…
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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