What's In The Cards For Extended Stay (STAY) In Q4 Earnings?
Zacks Investment Research | Feb 25, 2018 11:48PM ET
Extended Stay America, Inc. (NYSE:STAY) is scheduled to report fourth-quarter 2017 results on Feb 27, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 7.9%. Extended Stay surpassed expectations in two of the last four quarters, the average being a positive 14.2%.
Let’s discuss the factors that will likely influence the company’s fourth-quarter results:
The transformational initiatives undertaken by the company are expected to continue driving RevPAR (Revenue per Available Room) as hotels that have been renovated are witnessing increased Average Daily Rate (ADR) and occupancy levels. For the fourth quarter, the company expects comparable RevPAR growth between 0% and 2%.
Additionally, various sales and marketing initiatives, and limited exposure to inbound international travel are likely to drive the top line. Also, franchise sales in the quarter might add to revenues. The Zacks Consensus Estimate for revenues is pegged at $301.06 million, implying a 1.8% decline. However, we note that the company’s lack of exposure to emerging markets might limit its revenue growth potential. That said, the same also limits its exposure to volatile oil markets and unfavorable currency impact, which may boost results.
The company’s expense containment and cost-saving measures have been supporting margins. In the first nine months of 2017, operating margins expanded 60 basis points to 55.7%. The trend is expected to continue in the to-be-reported quarter.
However, the company incurred approximately $0.3 million in expenses in the prior quarter owing to the post-hurricane maintenance efforts. The company anticipates to incur the same amount in the fourth quarter mainly for landscaping.
The company expects adjusted EBITDA between $127 million and $132 million in the fourth quarter, lower than the prior-year quarter. Moreover, the Zacks Consensus Estimate for earnings per share is pegged at 17 cents, implying 15% a year-over-year decline.
Quantitative Model Prediction
Our quantitative model shows that Extended Stay America does not have the right combination of two main ingredients — a positive Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.