Timeshares are likely to get a nasty rap sometimes, but as a glad, long-time timeshare owner, you won’t hear anything negative from me. In actual fact, investors within the timeshare stock Travel + Leisure Co. (NYSE:TNL), formerly referred to as Wyndham Destinations, are probably not complaining either because the stock has been trending higher as of late.
The share price of Travel + Leisure rose about 6% on Wednesday after the corporate delivered earnings that beat consensus estimates. The stock has already gained roughly 12% 12 months to this point, which is about equal to its return for all of 2023. The query for investors now could be: do you desire to buy a timeshare stock?
As noted above, Travel + Leisure was called Wyndham Destinations under a special ticker after it was spun off from Wyndham Hotels and Resorts (NYSE:WH) in 2018. In 2021, Wyndham Destinations rebranded to the present Travel + Leisure Co. after Wyndham bought the magazine of the identical name. Thus, the firm now is just not only a timeshare company because it also offers media content and travel services to its members and subscribers.
Travel + Leisure owns greater than 245 resorts, including the Wyndham, Margaritaville, Sports Illustrated, and Accor timeshare brands, and has greater than 830,000 timeshare owners. It also owns the timeshare trading network RCI.
That short recap aside, it was the timeshare, or vacation-ownership business, that drove earnings higher for Travel + Leisure within the fourth quarter. Overall, its revenue rose 5% 12 months over 12 months within the quarter to $935 million, with the vacation-ownership business generating $776 million of that, a 5% increase. Nonetheless, while solid, the corporate’s Q4 revenue barely underperformed projections.
Net sales of vacation ownership interest (VOI) hit $410 million within the quarter, up 7% 12 months over 12 months. That was driven by 172,000 tours in Q4, up from 147,000 within the fourth quarter of 2022. Nonetheless, volume per guest (denoted in dollars) was down 11% to $3,058, due partially to the next mix of recent owner tours.
For the total 12 months, vacation ownership revenue was up 7% to $3 billion.
“Our core vacation-ownership business performed at or higher than our expectations on every key measure, effectively leveraging continued leisure travel demand,” said Michael Brown, president and CEO of Travel + Leisure Co., within the earnings report.
The smaller travel and membership segment saw its revenue decline 3% 12 months over 12 months within the quarter to $158 million and drop 3% for the total 12 months to $711 million.
Overall, Travel + Leisure’s expenses were just about flat within the quarter, and its operating income grew 18% to $190 million. Net income was up 43% 12 months over 12 months within the quarter to $129 million or $1.78 per share. For the total 12 months, net income rose 11% to $396 million or $5.31 per share.
Partly sunny outlook with dividend raise
Travel + Leisure stock got a lift not only from the earnings results but additionally from the corporate’s partly sunny outlook for 2024. Travel + Leisure anticipates between $910 million and $940 million in adjusted EBITDA for fiscal 2024, which can be up from $908 million.
Gross VOI sales are anticipated to be between $2.25 billion and $2.35 billion in 2024, which can be up from $2.15 billion in 2023. Meanwhile, volume per guest (VPG) is predicted to be down barely from a mean of $3,128 in 2023 to between $2,900 and $3,000.
Zooming in a bit closer, Travel + Leisure is targeting adjusted EBITDA of $185 million to $190 million in Q1, up from $184 million in the identical quarter a 12 months ago. The expectation for gross VOI sales in Q1 is $460 million to $480 million, which can be up from $454 million in Q1 2023. Nonetheless, VPG is anticipated to are available in between $2,925 and $3,025, which can be lower than the $3,215 in VPG in the identical quarter a 12 months ago.
Travel + Leisure also plans on boosting its dividend in the primary quarter to 50 cents per share, up from 45 cents last quarter. It might be the third straight 12 months of dividend increases and put the payout back at the identical level it was when COVID hit. The corporate currently pays out a pleasant 4.1% yield.
Travel + Leisure is just not going to shoot the lights out, but at this very low-cost valuation, with a forward price-to-earnings ratio of seven.9, decent earnings potential, and dividend, it still has some appeal, especially in a travel industry that’s poised for decent growth. The consensus price goal is about $50 per share, which is 15% higher than the present price.
Thus, even for those who don’t wish to buy a timeshare, this timeshare stock might warrant a tour to see if it is perhaps value your investment. (Full disclosure: I don’t own TNL stock or a TNL timeshare).
Disclaimer: All investments involve risk. By no means should this text be taken as investment advice or constitute responsibility for investment gains or losses. The data on this report mustn’t be relied upon for investment decisions. All investors must conduct their very own due diligence and seek the advice of their very own investment advisors in making trading decisions.