Renovated Comfort Brands, Ascend and Cambria Concepts Position Choice Well for Long-Term Growth
We are initiating coverage of Choice Hotels with a narrow moat rating and $60 fair value estimate. The shares currently look slightly undervalued.Our fair value estimate is based on our forecast for 7% annual revenue growth over the next 10 years, driven by 4% and 3% annual growth in units and revenue per available room, respectively. We model Choice to leverage top-line growth, leading to operating margins expanding to 30% in 2025 from 26% in 2015.
Choice’s narrow moat is driven by an intangib...
Choice Hotels International is a hotel franchisor. The company franchises lodging properties under the following proprietary brand names: Comfort Inn?, Comfort Suites?, Quality?, Clarion?, Clarion Pointe?, Sleep Inn?, Econo Lodge?, Rodeway Inn?, MainStay Suites?, Suburban Extended Stay Hotel?, WoodSpring Suites?, Cambria? Hotels, and Ascend Hotel Collection?. The company's primary segment is the hotel franchising business. The company's domestic franchising operations are conducted through direct franchising relationships while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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