Wednesday, April 28, 2010

Wyndham Worldwide (WYN) Beats Estimates Again, Raises Guidance for Q2 & Full Year 2010

After holding Wyndham Worldwide (WYN) since May 2009, I dumped almost the entire stake 2 weeks ago in the mid $26s, simply to lock in profits after a big move. The stock was once ultra cheap and now is probably a decent value - but not like it used to be. Not that valuation matters in this market. The company continues to execute and reported a solid quarter, with increases in guidance for Q2 and the full year of 2010.

A quick look at earnings (full report here)
  • Wyndham Worldwide Corp (WYN), franchiser of Days Inn and Super 8 hotels, posted higher first-quarter net income on Wednesday and raised its earnings and revenue outlook for the year. Net income rose to $50 million, or 27 cents per share, from $45 million, or 25 cents per share, a year earlier. Excluding items, Wyndham posted a profit of 34 cents per share.
  • Revenue fell 1.7 percent to $886 million, while expenses fell nearly 7 percent.
  • The company now expects annual revenue between $3.6 billion and $3.9 billion, up from its previous outlook of $3.5 billion to $3.9 billion. It sees adjusted earnings of $1.56 and $1.71 per share.
EPS bested analysts by 4 cents. Q2 was raised to $.38 to $.42 vs analysts $.37. Analysts were in at $1.60 for the year, while Wyndham had previously guided $1.48 to $1.69.

Considering RevPAR fell by 6.8% these are actually quite good results, but essentially it's a game of cutting costs by a larger amount than revenue fell.

The company continued to buy back shares, and increased its dividend:
  • ...the Company repurchased approximately 757,000 shares of its common stock at an average price of $24.20
  • ...the Company tripled its quarterly dividend, paying its first dividend at the $0.12 per share level on March 15, 2010
[Feb 10, 2010: Wyndham Worldwide Beats Estimates, Raises Dividend, Restarts Share Buyback Program]

Long Wyndham Worldwide in fund; no personal position

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