Choice Hotels International (CHH): Evaluating Valuation After Expansion Moves and Strategic Leadership Appointment

If you hold or are watching Choice Hotels International (CHH), this week’s wave of announcements might be hard to ignore, or at least enough to spark another look at your portfolio allocation. CHH kicked off September by unveiling seven new Everhome Suites properties across the U.S. and, for the first time, opened a Radisson Blu in Argentina. Closely following these expansion moves, the company announced the appointment of Joshua Sloser as Chief Commercial Officer, hiring a veteran in hospitality tech and strategy. Taken together, these developments are all about getting ahead of shifting traveler trends and finding new avenues for growth. Despite these expansion moves, CHH shares have slid over the past year, with a return of -11% and a continued loss since the start of the year. There was a brief bump this week following the news, but the longer-term picture still shows fading momentum. That comes even as the company has managed steady growth in revenue and has set out a clear plan to diversify its portfolio both geographically and in the types of travelers it serves. So now the big question surfaces: after a tough year for the stock, is the market still overlooking CHH’s growth ambitions, or are all these expansion plans already baked into the price?

Most Popular Narrative: 15.8% Undervalued

Current narrative consensus points to Choice Hotels International as significantly undervalued, with a fair value estimate well above the prevailing share price.

Strong international expansion, including new direct franchising in Canada, a master franchising deal in China targeting 10,000 rooms, and increased presence in EMEA and South America, is set to capture rising global travel demand from growing middle-class populations. This expansion is expected to drive future revenue and EBITDA growth that exceeds historical expectations.

Curious what’s fueling this upbeat view? The story hinges on aggressive global expansion, digital leaps, and a financial outlook that dares to break tradition. There is one crucial assumption behind the target. Get the inside calculation and discover if it stacks up or falls apart.

Result: Fair Value of $132.93 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing softness in international travel and heavy reliance on midscale brands could impact revenues and margins if these challenges persist.

Find out about the key risks to this Choice Hotels International narrative.

Another View: Discounted Cash Flow Model

Looking through the lens of our DCF model, the numbers also point to Choice Hotels International being undervalued right now. This supports the earlier narrative. But does every method really agree, or might something be missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Choice Hotels International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Choice Hotels International Narrative

If you are keen to test your own theories, dig into the numbers and piece together your own outlook, you can do so in just a few minutes by using Do it your way.

A great starting point for your Choice Hotels International research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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