Choice Hotels International, Inc. Fundamental Analysis
Choice Hotels International, Inc. (CHH) shows moderate financial fundamentals with a PE ratio of 13.91, profit margin of 21.55%, and ROE of 3.13%. The company generates $1.6B in annual revenue with N/A year-over-year growth of N/A.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 39.3/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze CHH's fundamental strength across five key dimensions:
Efficiency Score
ExcellentCHH demonstrates superior asset utilization.
Valuation Score
ExcellentCHH trades at attractive valuation levels.
Growth Score
ModerateCHH shows steady but slowing expansion.
Financial Health Score
WeakCHH carries high financial risk with limited liquidity.
Profitability Score
ModerateCHH maintains healthy but balanced margins.
Key Financial Metrics
Is CHH Expensive or Cheap?
P/E Ratio
CHH trades at 13.91 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, CHH's PEG of 1.08 indicates fair valuation.
Price to Book
The market values Choice Hotels International, Inc. at 35.00 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 4.31 times EBITDA. This is generally considered low.
How Well Does CHH Make Money?
Net Profit Margin
For every $100 in sales, Choice Hotels International, Inc. keeps $21.55 as profit after all expenses.
Operating Margin
Core operations generate 26.99 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $3.13 in profit for every $100 of shareholder equity.
ROA
Choice Hotels International, Inc. generates $11.74 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Choice Hotels International, Inc. produces operating cash flow of $223.61M, showing steady but balanced cash generation.
Free Cash Flow
Choice Hotels International, Inc. generates strong free cash flow of $259.05M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $5.69 in free cash annually.
FCF Yield
CHH converts 5.54% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
13.91
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.08
vs 25 benchmark
P/B Ratio
Price to book value ratio
35.00
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.96
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
15.35
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.95
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
3.13
vs 25 benchmark
ROA
Return on assets percentage
0.12
vs 25 benchmark
ROCE
Return on capital employed
0.17
vs 25 benchmark
How CHH Stacks Against Its Sector Peers
| Metric | CHH Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 13.91 | 27.54 | Better (Cheaper) |
| ROE | 312.73% | 1273.00% | Weak |
| Net Margin | 21.55% | -3354.00% (disorted) | Strong |
| Debt/Equity | 15.35 | 0.39 | Weak (High Leverage) |
| Current Ratio | 0.95 | 2.46 | Weak Liquidity |
| ROA | 11.74% | 279.00% | Weak |
CHH outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Choice Hotels International, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
N/A
Industry Style: Cyclical, Growth, Discretionary
EPS CAGR
N/A
Industry Style: Cyclical, Growth, Discretionary
FCF CAGR
N/A
Industry Style: Cyclical, Growth, Discretionary