Choice Hotels International Inc (CHH) stock analysis

P/E above its 5-year median

Choice Hotels International's P/E of 26.7 is above its own 5-year median of 20.3.

P/E above the industry

Choice Hotels International's P/E of 26.7 is above the Hotels and Motels median of 25.6.

EV/EBITDA above its 5-year median

Choice Hotels International's EV/EBITDA of 16.9 is above its 5-year median of 15.0.

P/B above the industry

Choice Hotels International's price-to-book of 41.00 is above the Hotels and Motels median of 2.81.

Trading above fair value

The share price of $120.01 is above our fair value estimate of $89.22.

Margin of safety under 20%

The price is 34.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 9.7% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -46.0% over the last twelve months, against a 5-year average of 37.5% a year.

Growing slower than the industry

Revenue grew 2.1% over the last twelve months; the Hotels and Motels median is 3.9%.

Guidance lowered

Choice Hotels International lowered its Full-Year 2026 Adjusted net income outlook on Aug 5, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity over 15%

Return on equity was 147% over the last twelve months and averaged 299% over five years.

Return on capital over 10%

Return on invested capital was 13.7%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Choice Hotels International's return on equity of 147% is above the Hotels and Motels median of 20.0%.

Earnings grew over 5 years

Net income grew 37.5% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 12.7% over the last twelve months, against a 5-year average of 21.9%.

Net margin above the industry

Choice Hotels International's net margin of 12.7% is above the Hotels and Motels median of 5.7%.

High debt

Debt is 1652% of shareholders' equity, above the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 9.5% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 3.8 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 1.26 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.11; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Choice Hotels International paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Choice Hotels International yields 1.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 6 fiscal years.

Covered by earnings

Dividends take 25.5% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.