I travel all around the country and the world talking with investors. Last month I was in California and next week I’ll be in Florida. While I spend most a lot of my time on the road, there’s nothing quite like kicking back and taking a proper vacation, so today I’m going to review some of the biggest names in the travel and leisure industry who have just released earnings.
Expedia Inc. (EXPE) runs the world’s number-one travel website, helping millions of people each month plan their travel. The site’s simple, easy-to-use booking format allows novice travelers and globetrotters alike to choose from a wide selection of vacation packages, flights, hotels, rental cars, resorts, cruises, attractions and more. The site is U.S.-based but has localized sites for more than 30 countries.
In the fourth quarter, Expedia enjoyed an increase in gross bookings for both hotel rooms and airline tickets. So compared with the same quarter last year, revenues climbed 24% to $974.9 million; this topped analyst estimates of $930.7 million in sales. Meanwhile, the company’s profits fell 90% to $6.73 million or $0.05 per share. Adjusted earnings weighed in at $0.63, which missed the consensus estimate by 3%.
The reason that Expedia’s earnings plunged is that the company had to set aside $110 million related to Hawaii Tax Court litigation. The company is currently appealing the state’s decision that Expedia owes it excise taxes on hotel room reservations in Hawaii. Should Expedia win this case, it will be repaid by Hawaii, but in the meantime the company is preparing for a worst-case scenario. So despite the bottom-line contraction, shares of EXPE still rose following the earnings announcement. Reviewing the company’s fundamentals and the current level of buying pressure for the stock, EXPE is currently an A-rated buy.
With Royal Caribbean International, Celebrity Cruises and three other cruise lines under its belt, Royal Caribbean Cruises Ltd. (RCL) is the second largest cruise line operator in the world. Based in Miami, Florida, the company operates 41 ships that sail to 460 destinations on six continents. The company plans to introduce two more ships into its fleet by the end of 2015.
Royal Caribbean also announced lower earnings this quarter thanks to an impartment charge related to the company’s Pullmantur brand. The company reported a net loss of $392.8 million; excluding the charge, net income weighted in at $21.1 million or $0.10 per share. This beat the consensus earnings estimate by a hefty 67%. Meanwhile, the company saw an increase in passenger cruise days so total sales advanced 2% to $1.81 billion, just missing the $1.82 billion consensus sales estimate.
However, looking ahead to 2013, the company doesn’t expect much in the way of earnings. While analysts forecast earnings of $2.67 per share, Royal Caribbean sees earnings in a range of $2.30 to $2.50 per share. For this reason, I have RCL down at a C-rated hold.
Over the decades, the Walt Disney (DIS) brand has grown into one of the world’s largest entertainment companies, with 11 theme parks around the world. And everything about the Disney theme parks is done on a grand scale. The Walt Disney World resort in Orlando alone has 62,000 employees and covers 40 square miles—double the area of Manhattan. In addition to the theme parks, Walt Disney also operates its own cruise line and a vacation club.
For the first quarter, Disney saw lower earnings at its studio entertainment division but this was offset by its theme parks business. Compared with Q1 2012, sales climbed 5% to $11.34 billion, ahead of the $11.21 billion consensus estimate. And while net income did retreat 5% to $1.38 billion, the company’s adjusted earnings of $0.79 per share beat analyst estimates by 4%. I consider DIS, a Conservatively-rated stock, a B-rated buy.
Wyndham Worldwide Corp. (WYN) is another big player in the hospitality industry, with over 7,300 hotels across six continents. While Wyndham hotels is the company’s best known hotel brand, the company also operates Ramada, Days Inn, Super 8 and Travelodge. In addition to its hotels group, the company manages 100,000 vacation rentals in nearly 100 countries.
Wyndham reported strong operating results at its lodging and vacation ownership business for the fourth quarter. Compared with the same quarter last year, total revenues climbed 9% to $1.09 billion, topping analyst estimates by 3%. Over the same period, net income jumped 45% to $81 million, or $0.57 per share. Excluding special items, adjusted earnings weighed in at $0.63 per share, also topping the consensus estimate by 5%.
But it appears that the best may be to come. The company has just hiked up 2013 earnings guidance to a range of $3.57 to $3.70 per share (up from $3.50 to $3.60 per share). At the same time it boosted its sales guidance to a range of $4.925 billion to $5.1 billion (up from $4.9 to $5.05 billion). Finally, the company has increased its quarterly dividend by 26% to $0.29 per share. While the next dividend hasn’t been declared just yet, it should be announced soon. So WYN is also a B-rated buy