NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, revenue growth, expanding profit margins, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.04 is very high and demonstrates very strong liquidity.
- CHH's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 45.00% is the gross profit margin for CHOICE HOTELS INTL INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.40% is above that of the industry average.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.27% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CHH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- CHOICE HOTELS INTL INC has improved earnings per share by 19.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHOICE HOTELS INTL INC increased its bottom line by earning $1.85 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.85).
Choice Hotels International, Inc, together with its subsidiaries, operates as a hotel franchisor worldwide. The company has a P/E ratio of 19.6, below the average leisure industry P/E ratio of 20.3 and above the S&P 500 P/E ratio of 17.7. Choice Hotels International has a market cap of $2.27 billion and is part of the
industry. Shares are up 7.9% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.