WYND - Embedded Expectations Analysis - 2020 04 30
ï€ Wyndham Destinations, Inc. (WYND:USA) currently trades near historical averages relative to UAFRS-based (Uniform) earnings, with an 18.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their technology investments, ARN acquisition, and new owner growthï€ Specifically, management may lack confidence in their ability to meet their EPS guidance, and they may be exaggerating their focus on improving margins and new owner growth. In addition, they may be overstating the success of their technological investments and marketing strategies, their enhanced search functionality, and owner optionality. Furthermore, they may lack confidence in their ability to transform their business, sustain Blue Thread sales and EBITDA growth, and increase cash plus transactions and wallet share utilizing ARN technology. Finally, they may lack confidence in their ability to enhance their working capital and adapt to customers online booking trends
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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