Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Wyndham Rides the Strength of Vacation Ownership

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Hospitality and lodging is one of the high-growth industries for the next few years, and Wyndham Worldwide (NYSE: WYN  ) is going along for the ride. After a rocky but nonetheless upward ride throughout 2013, the company appears set for more growth on the income statement and in stock price. Wyndham can appeal to a few different types of investors -- value-seekers, growth-hungry, and income-loving. The company is attractively priced at roughly 14.5 times forward-earnings prospects, has the tailwinds of the hotel industry's bullish future, and recently upped its dividend by 21%. Don't let the stock's recent pullback scare you -- this is one sound play on hospitality.

A penny's worth
The market wasn't impressed with Wyndham's earnings, which included an adjusted bottom line of $0.73 per share -- 16% more than the prior year's number and about a penny under analyst expectations for the company's fiscal fourth quarter. Adjusted EBITDA was up 10%, as well.

Leading the way for the company is vacation ownership (timeshare) and plain old hotel-room bookings. Lodging grew sales by 10% to $245 million. In the U.S., RevPAR -- the go-to unit level metric for hotels; stands for "revenue per available room" -- gained an impressive 4.7%, while systemwide the figure grew 3.8%.

Vacation ownership saw sales grow 12% to $658 million. The figure really puts into perspective the fact that Wyndham is much more a timeshare business than it is a hotelier -- at least by the numbers.

How does it stack up?
If we treat Wyndham more as a vacation ownership business than a diversified hotel business, it's easier to compare to peers. A few basic points mark the timeshare business -- extremely high marketing expense with the potential for tremendous cash flows. Marriott Vacations Worldwide (NYSE: VAC  ) is the closest competitor, though it is a much smaller company by market cap. Marriott Vacations is a fast-growing business, spun off from its hospitality parent a little more than three years ago. With a huge development pipeline and healthy sales, the company is growing earnings and sales by the double digits -- exceeding the recent results from Wyndham.

Marriott trades at a richer 18.6 times forward earnings and has an EV/EBITDA of roughly 10 times. Wyndham appears cheaper at 14.5 times earnings but with a heavier balance sheet picks up a richer EV/EBITDA of just under 12 times. Neither company is overlevered considering the asset-heavy business model, but Marriott's operating level valuation is definitely more appealing.

Both companies will likely continue their upward trajectories based upon the industry tailwinds and strong, long-running brand names. Wyndham may be a slightly less risky play given its lodging segment. If timeshare demand takes a dive, Marriott Vacations has little to fall back on.

Investors looking for a comfortable, attractively priced play on the hot hotel and timeshare industry should take a close look at Wyndham.

And you'll definitely want to take a close look at these stocks
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 18, 2014, at 3:12 PM, DeborahMe wrote:

    Wyndham timeshare has been sued in federal court several times by many wyndham timeshare owners for committing wrongs in their vacation credits, such as breach of contract, violation of California’s Timeshare Act and breach of fiduciary duty, among others. This is a good article about Wyndham timeshare:

  • Report this Comment On April 04, 2015, at 2:35 PM, fuckoffyoun wrote:

    The only reason that Wyndham is still in business is that they don't let anyone record their sales pitches. During those, the salespeople lie until they get you to buy a timeshare. If they recorded the sales pitches, anyone who had bought one would be able to get their timeshare contract rescinded due to breach of contract. If you are reading this, tell everyone you know NOT to buy a timeshare, esplecially a \Wyndham.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2838556, ~/Articles/ArticleHandler.aspx, 8/28/2015 9:01:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Michael Lewis

Michael is a value-oriented investment analyst with a specific interest in retail and media businesses. Before coming to the Fool, Michael worked with private investment funds focusing on deep value and special situations. Currently living in the media capital of the world--Los Angeles, California.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,654.77 369.26 0.00%
S&P 500 1,987.66 47.15 0.00%
NASD 4,812.71 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 4:06 PM
WYN $77.24 Up +1.35 +0.00%
Wyndham Worldwide… CAPS Rating: ****
VAC $72.97 Up +1.36 +0.00%
Marriott Vacations… CAPS Rating: ****