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Category: Stock Market and Extended Stay America
Date: 1 October 2019 Stock Price: $14.76 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Extended Stay America a leading brand in the mid-priced extended stay segment in the U.S with over 600 hotels.
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About Extended Stay America
Extended Stay America® is the leading brand in the mid-priced extended stay segment in the U.S. with 627 hotels and nearly twice as many rooms as its nearest competitor. ESH Hospitality, Inc. (“ESH”), a subsidiary of Extended Stay America, Inc. (“ESA”), is the largest lodging REIT in North America by unit and room count, with 554 hotels and approximately 61,500 rooms in the U.S. ESA also manages or franchises an additional 73 Extended Stay America® hotels.
Overview of Extended Stay's latest earnings report
- Total Revenues: $323.656 million (down from $336.501 million for the same quarter of the previous year
- Revenue decreased by -3.8% over the last 12 months
- Cost of sales: $ 223.207 million (up from $224.454 million for the same quarter of the previous year)
- Cost of sales decreased by -0.6% over the last 12 months
- Net income: $59.658 million (down from $65.570 million for the same quarter of the previous year)
- Diluted earnings per share: $0.28 (up from $0.34 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 188.813 million (down from 190.183 million for the same quarter of the previous year)
- Cash and cash equivalents: $286.616 million
- Cash and cash equivalents per share: $1.52
- Cash and cash equivalents makes up 10.28% of Extended Stay's market capital
- Cash and cash equivalents makes up 7.28% of Extended Stay's total assets
- Stockholders equity of Extended Stay America: $1.313 billion
- Stockholders equity per share: $6.95
Extended Stay America's management commentary on the results and earnings guidance
CHARLOTTE, N.C. – August 6, 2019 (GlobeNewswire) — Extended Stay America, Inc. and ESH Hospitality, Inc. (NASDAQ:STAY) (together, the “Company”) today announced consolidated results for the three and six months ended June 30, 2019
Extended Stay America’s President and Chief Executive Officer, Jonathan Halkyard, commented, “We are pleased with the significant progress in our growth plans during the quarter with our total hotel pipeline increasing by 18% in the second quarter to 8,700 rooms, or approximately 13% of existing supply, and successfully opening our first franchise conversion hotel.” Mr. Halkyard continued, “After extensive exploration of a variety of possible transformative transactions to which our Boards of Directors have been, and remain, open, our Boards have concluded that the terms currently available for such transactions do not presently provide a superior alternative to the opportunity presented by the aggressive pursuit of our ESA 2.0 strategy, including steps to accelerate the franchising portion of that strategy.”
Lastly, Mr. Halkyard noted, “We believe our shares are significantly undervalued at recent trading prices and have asked our Boards to increase the Company’s remaining authorization to more than $260 million, which they have approved. With the review concluded, we expect to return a significant amount of capital to shareholders in the second half of 2019 and in 2020.
The image below shows the fiscal outlook of Extended Stay for their 2019 fiscal year.
Extended Stay America’s President and Chief Executive Officer, Jonathan Halkyard, commented, “We are pleased with the significant progress in our growth plans during the quarter with our total hotel pipeline increasing by 18% in the second quarter to 8,700 rooms, or approximately 13% of existing supply, and successfully opening our first franchise conversion hotel.” Mr. Halkyard continued, “After extensive exploration of a variety of possible transformative transactions to which our Boards of Directors have been, and remain, open, our Boards have concluded that the terms currently available for such transactions do not presently provide a superior alternative to the opportunity presented by the aggressive pursuit of our ESA 2.0 strategy, including steps to accelerate the franchising portion of that strategy.”
Lastly, Mr. Halkyard noted, “We believe our shares are significantly undervalued at recent trading prices and have asked our Boards to increase the Company’s remaining authorization to more than $260 million, which they have approved. With the review concluded, we expect to return a significant amount of capital to shareholders in the second half of 2019 and in 2020.
The image below shows the fiscal outlook of Extended Stay for their 2019 fiscal year.
Extended Stay America (NASDAQ: STAY) stock price history
The image below shows the stock price history of Extended Stay America (NASDAQ:STAY) over the last 5 years. And it's not been a good time for Extended Stay America stockholders. 5 years ago the stock was trading at around $22.70 and it is currently trading at $14.76 a stock. So over a 5 year period the stock of Extended Stay America (NASDAQ:STAY) declined by -34.9% . The stock is also trading at closer to its 52 week low of $12.88 than it is to its 52 week high of $20.65, which to us is a clear indication that the short term sentiment and momentum towards Extended Stay America's stock is very negative.
Recent coverage of Extended Stay America
The extract below covers the latest on Extended Stay America as obtained from Zacks
Extended Stay America (STAY - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. Let's take a look at why this stock fell to the lowest of all the Zacks Ranks.
Description
Extended Stay America, Inc., together with its subsidiaries, owns, operates, and manages hotels in the United States. As of February 27, 2019, the company had a network of 627 hotels. It serves customers in the mid-priced extended stay segment. The company also relicenses Extended Stay America brand to third party franchisees. Extended Stay America, Inc. was founded in 1995 and is headquartered in Charlotte, North Carolina.
Recent Earnings
On August 6, STAY reported EPS of $0.32 and that was one cent below the Zacks Consensus Estimate of $0.33. That was the second consecutive miss of a penny by STAY.
Read the full article here
Extended Stay America (STAY - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. Let's take a look at why this stock fell to the lowest of all the Zacks Ranks.
Description
Extended Stay America, Inc., together with its subsidiaries, owns, operates, and manages hotels in the United States. As of February 27, 2019, the company had a network of 627 hotels. It serves customers in the mid-priced extended stay segment. The company also relicenses Extended Stay America brand to third party franchisees. Extended Stay America, Inc. was founded in 1995 and is headquartered in Charlotte, North Carolina.
Recent Earnings
On August 6, STAY reported EPS of $0.32 and that was one cent below the Zacks Consensus Estimate of $0.33. That was the second consecutive miss of a penny by STAY.
Read the full article here
Extended Stay America (NASDAQ: STAY) latest stock valuation
So what is Extended Stay America (NASDAQ:STAY) stock worth based on the release of their latest earnings report and their outlook provided? Based on their earnings report and the fiscal guidance provided our valuation models provide a target (full value) price for Extended Stay America of $14.50 a stock. We therefore believe that the stock is fully valued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $14.40. A good entry point into Extended Stay America stock would be at $13 or below.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $14.40. A good entry point into Extended Stay America stock would be at $13 or below.