WYND - Embedded Expectations Analysis - 2019 03 26
Wyndham Destinations, Inc. (WYND:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 13.0x Uniform P/E. At these levels, the market is pricing in muted expectations for the firm, and management may be concerned about earnings and revenue growth, the Blue Thread program's ability to source new owners, and marketing strategies.Specifically, management may be overstating their satisfaction with earnings, and may lack confidence in their ability to meet earnings targets, sustain EBITDA and portfolio growth, and overcome revenue headwinds. Additionally, they may lack confidence in the Blue Thread program's ability to source new owners and establish a pipeline of incremental sales. Moreover, they may be concerned about their marketing mix and ability to grow their open channel. Furthermore, they may lack confidence in their ability to sustain dividend increases and share repurchases, and may be exaggerating their economies of scale.
Wyndham Destinations is a vacation ownership and exchange company. The company provides everyday travelers the opportunity to own, exchange or rent their vacation experience. The company's operations are grouped into two segments: Vacation Ownership, which is a timeshare business with resorts and owners that develops and markets vacation ownership interests (VOIs) to individual consumers, provide consumer financing in connection with the sale of VOIs, and provides property management services at resorts; and Vacation Exchange, which operates the vacation exchange network with members, and has relationships with vacation ownership resorts located in various countries and territories.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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