|
Related Topics
|
Category: Stock Market and Extended Stay America
Date: 11 November 2019 Stock Price: $14.70 We take a look at the 3rd 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.
|
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 624 hotels and approximately 68,700 rooms in the U.S.
Overview of Extended Stay's 3rd quarter 2019 earnings report
- Total Revenues: $328.495 million (down from $347.724 million for the same quarter of the previous year
- Revenue decreased by -5.2% over the last 12 months
- Operating Expenses: $ 227.623million (down from $229.721 million for the same quarter of the previous year)
- Operating expenses decreased by -0.9% over the last 12 months
- Net income: $53.230 million (down from $65.692 million for the same quarter of the previous year)
- Diluted earnings per share: $0.22 (down from $0.38 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 187.015 million (down from 189.253 million for the same quarter of the previous year)
- Cash and cash equivalents: $489.76 million
- Cash and cash equivalents per share: $2.61
- Cash and cash equivalents makes up 17.81% of Extended Stay's market capital
- Cash and cash equivalents makes up 11.8% of Extended Stay's total assets
- Stockholders equity of Extended Stay America: $1.266 billion
- Stockholders equity per share: $6.76
- Extended Stay America is trading at 2.17 times its stockholders equity which is within the expected range of between 2 and 4 times that most firms tend to trade at
- Number of hotels for Extended Stay as at 3rd quarter 2019: 624
- Number of rooms for Extended Stay America as at 3rd quarter 2019: 68 749
- Occupancy rate of Extended Stay America: 80.8%
Extended Stay America's management commentary on the results and earnings guidance
CHARLOTTE, N.C., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. and ESH Hospitality, Inc. (together, the “Company”) (NASDAQ:STAY) today announced consolidated results for the three and nine months ended September 30, 2019.
Third Quarter 2019 Highlights
Extended Stay America’s President and Chief Executive Officer, Jonathan Halkyard, commented, “Our focus on core extended stay guests enabled us to outperform our competitive set yet again this quarter, a quarter which was characterized by slowing growth in the Economy and Mid-priced chain scales.”
Mr. Halkyard continued, “We have increased the pace of capital returns to shareholders in recent months and are on track to return more than 10% of our recent market capitalization to shareholders in 2019 through dividends and Paired Share repurchases. Capital returns remain a top priority for the Company with a strong balance sheet, a dividend yield in excess of 6% and more than $200 million remaining in repurchase authorization at the end of the third quarter.”
Third Quarter 2019 Highlights
- Net Income of $53.2 million
- Total revenues of $332.7 million
- Comparable system-wide Revenue Per Available Room (“RevPAR”) declined 1.3%
- Adjusted EBITDA of $156.3 million
- Adjusted Funds from Operations (“Adjusted FFO”)1 of $0.54 per diluted Paired Share
- Adjusted Paired Share Income of $0.33 per diluted Paired Share
- $186 million in capital returns to shareholders for the first nine months of 2019
Extended Stay America’s President and Chief Executive Officer, Jonathan Halkyard, commented, “Our focus on core extended stay guests enabled us to outperform our competitive set yet again this quarter, a quarter which was characterized by slowing growth in the Economy and Mid-priced chain scales.”
Mr. Halkyard continued, “We have increased the pace of capital returns to shareholders in recent months and are on track to return more than 10% of our recent market capitalization to shareholders in 2019 through dividends and Paired Share repurchases. Capital returns remain a top priority for the Company with a strong balance sheet, a dividend yield in excess of 6% and more than $200 million remaining in repurchase authorization at the end of the third quarter.”
Distributions and Share Repurchases
On November 6, 2019, the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc. declared cash distributions totaling $0.23 per Paired Share for the third quarter of 2019. The distributions are payable on December 4, 2019 to shareholders of record as of November 20, 2019. The Company repurchased 4.0 million Paired Shares during the third quarter for an aggregate purchase of $57.5 million. Since the end of the third quarter, the Company has repurchased an additional 2.0 million Paired Shares for an aggregate purchase price of $28.8 million. The Company’s total remaining repurchase authorization was approximately $177 million as of close of the market today.
2019 Outlook
The Company’s 2019 Outlook is updated as follows:
On November 6, 2019, the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc. declared cash distributions totaling $0.23 per Paired Share for the third quarter of 2019. The distributions are payable on December 4, 2019 to shareholders of record as of November 20, 2019. The Company repurchased 4.0 million Paired Shares during the third quarter for an aggregate purchase of $57.5 million. Since the end of the third quarter, the Company has repurchased an additional 2.0 million Paired Shares for an aggregate purchase price of $28.8 million. The Company’s total remaining repurchase authorization was approximately $177 million as of close of the market today.
2019 Outlook
The Company’s 2019 Outlook is updated as follows:
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 $19.70 and it is currently trading at $14.70 a stock. So over a 5 year period the stock of Extended Stay America (NASDAQ:STAY) stock declined by -25.4% . The stock is also trading at closer to its 52 week low of $12.88 than it is to its 52 week high of $19.73, 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 TheStreet,com
CHARLOTTE, N.C., Oct. 21, 2019 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. (NYSE:STAY) today announced their efforts to aid victims of Hurricane Dorian by providing temporary shelter assistance for those in need. Extended Stay America, a company that cares for people who are building a better future for themselves and their families, will offer a $500 travel credit that will be provided to hurricane victims who book a stay of 30 nights or more at any of its company-owned and operated hotel properties. Bahamian residents looking for temporary housing in the U.S. will be able to access this offer now through Dec. 31, 2019 by calling 1-877-885-7573 or visiting www.esa.com/extend-a-hand . "The storm that hit The Bahamas was a shock to the country, and many residents have been displaced from their homes as a result. We would like to extend our support to the Bahamian residents seeking safe shelter in the U.S.," said Mr. Jonathan Halkyard, Chief Executive Officer, Extended Stay America. "Extended Stay America wants to continue to put people first, and this offer to provide immediate shelter options to those affected by the storm is of the upmost importance to our company."
CHARLOTTE, N.C., Oct. 21, 2019 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. (NYSE:STAY) today announced their efforts to aid victims of Hurricane Dorian by providing temporary shelter assistance for those in need. Extended Stay America, a company that cares for people who are building a better future for themselves and their families, will offer a $500 travel credit that will be provided to hurricane victims who book a stay of 30 nights or more at any of its company-owned and operated hotel properties. Bahamian residents looking for temporary housing in the U.S. will be able to access this offer now through Dec. 31, 2019 by calling 1-877-885-7573 or visiting www.esa.com/extend-a-hand . "The storm that hit The Bahamas was a shock to the country, and many residents have been displaced from their homes as a result. We would like to extend our support to the Bahamian residents seeking safe shelter in the U.S.," said Mr. Jonathan Halkyard, Chief Executive Officer, Extended Stay America. "Extended Stay America wants to continue to put people first, and this offer to provide immediate shelter options to those affected by the storm is of the upmost importance to our company."
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 $14.65 a stock (up so slightly from our 2nd quarter 2019 earnings report valuation of Extended Stay America). 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 $14.65. A good entry point into Extended Stay America stock would be at $13 or below. We expect the stock of Extended Stay to trade in a narrow range around our target price in coming weeks and months until there is a new catalyst to drive the stock price either higher or lower
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 $14.65. A good entry point into Extended Stay America stock would be at $13 or below. We expect the stock of Extended Stay to trade in a narrow range around our target price in coming weeks and months until there is a new catalyst to drive the stock price either higher or lower
Next earnings release for Extended Stay America
It is expected that Extended Stay America's 4th quarter and full fiscal 2019 earnings will be released towards the middle of February 2020