Wyndham Worldwide - Aggressive Growth

Wyndham Worldwide (WYN) is buying up new units and building others at a frenzied pace. Shares are up, as are estimates, since is original feature back in August.

Everything is going well, but is the price tag too expensive for this Zacks #2 Rank (Buy)?

Company Description

Wyndham Worldwide has about 7,200 hotels world wide in addition to a 3.8 million member Exchange & Rental program with more than 80,000 locations.

Estimates Even Higher

When I featured the company back in August, Wyndham's full-year consensus estimates were at $1.87 for this year and $2.01 for 2011. Since then each year is up a dime.

The main reason for the jump was the 50% jump in net income it reported in October, which was accompanied by higher guidance.

Earnings per share came in at 68 cents which was a nickel better than the Zacks Consensus Estimate. Revenues were up in all three categories; Lodging, vacation exchange and rentals, as well as vacation ownership.

On a Shopping Spree

If you take a glance at a news feed for WYN on any financial website you will be inundated with headlines about a recent purchase or expansion. Recently the push to grow in China has been big.

As you would expect, the industry was beaten up in the recession, but Wyndham is well positioned to gobble up those smaller hotels and increase its market share.

Valuations and Comparisons

Wyndham is trading at just 14 times forward estimates, the best in its peer group. Its price to book is 1.8 times, much better than the 2.9 that the industry averages.

The mean for net profit margin and ROE for the industry are well into the red. However, WYN has a profit margin of almost 10% and an ROE just north of 13%. Not too bad.

The Chart

Shares of WYN are up nicely since the August, but the long-term earnings trend is what I really like. Take a look at the continually improving consensus estimates. They increase each year and then continue to grow through out year.

Read the August 19th Feature Here

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service

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