October 26, 2010 / 10:50 AM / in 7 years

UPDATE 3-Wyndham tops expectations, cites stronger economy

3 Min Read

* Q3 profit 84/shr vs 57/shr last year

* Adj Q3 earns 68/shr vs Street view 63/shr

* Revenue up 5 pct to $1.07 bln

* Sees 2011 EBITDA $925 mln - $955 mln

* Shares up 2 pct (Rewrites first paragraph, adds byline, outlook, comments)

By Helen Chernikoff

NEW YORK, Oct 26 (Reuters) - A recovering economy and cost controls helped Wyndham Worldwide Corp (WYN.N) raise its outlook for the year and post a larger-than-expected third-quarter profit increase on Tuesday, sending its shares up 2 percent.

Wyndham, which franchises such hotel brands as Super 8 and Days Inn, forecast adjusted earnings before interest, taxes, depreciation and amortization for 2011 in the range of $925 million to $955 million.

That handily beats consensus estimates of $914 million, said FBR Capital Markets analyst Patrick Scholes.

"If nothing else, that should make the stock go higher today," he said.

Wyndham, the world's largest timeshare operator, said its timeshare segment makes up about half its annual revenue, while vacation exchange and rentals make up 31 percent. Lodging makes up almost 20 percent.

The company surprised Wall Street because of lower costs in its timeshare segment, said Scholes. He thought they would be up around 7 percent, but they were flat.

Wyndham reported third-quarter profit of $156 million, or 84 cents per share, compared with $104 million, or 57 cents per share, a year earlier.

Stripping out a benefit related to an IRS examination of the company's former parent and a loss on a note buyback, the company reported earnings of 68 cents per share, which beat analysts' average expectations of 63 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $1.07 billion.

The bulk of Wyndham's more than 7,100 hotels fall into the low-cost, or economy, segment. Leisure travel accounts for about 70 percent of that business, FBR's Scholes said.

"The consumer is traveling more," Chief Financial Officer Tom Conforti told Reuters in an interview. "They're coming back in a moderate way."

Wyndham shares were up 58 cents, or 2 percent, at $30.46 in thin premarket trading.

Rival Starwood Hotels & Resorts Worldwide Inc HOT.N is slated to report its third quarter earnings on Thursday. (Reporting by Helen Chernikoff; Editing by Derek Caney)

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