Choice Hotels International Inc Stock Upgraded (CHH)

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, expanding profit margins, good cash flow from operations, solid stock price performance and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • CHH's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 47.50% 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 17.90% is above that of the industry average.
  • Net operating cash flow has significantly increased by 123.63% to $60.57 million when compared to the same quarter last year. In addition, CHOICE HOTELS INTL INC has also vastly surpassed the industry average cash flow growth rate of -21.95%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income increased by 11.3% when compared to the same quarter one year prior, going from $31.81 million to $35.40 million.

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