Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Choice Hotels International (NYSE: CHH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- CHH's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, CHH's share price has jumped by 30.96%, exceeding the performance of the broader market during that same time frame. 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.
- 45.22% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 15.37% trails the industry average.
- CHOICE HOTELS INTL INC's earnings per share declined by 12.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CHOICE HOTELS INTL INC increased its bottom line by earning $2.07 versus $1.85 in the prior year. For the next year, the market is expecting a contraction of 10.6% in earnings ($1.85 versus $2.07).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has decreased by 11.4% when compared to the same quarter one year ago, dropping from $31.86 million to $28.23 million.