After holding Wyndham Worldwide (WYN) since May 2009, I dumped almost the entire stake two 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. (Click to enlarge)
A quick look at earnings (full report here):
- Wyndham Worldwide Corp, 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% to $886 million, while expenses fell nearly 7%.
- 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
Disclosure: Long Wyndham Worldwide in fund; no personal position