Start here if you're new
what it is
It lets hotel owners use Choice's brands and booking tools so you get fee income without owning the buildings.
how it gets paid
Last year Choice Hotels made $1.6B in revenue. Franchising fees was the main engine at $0.88B, or 55% of sales.
what just happened
Choice posted $1.2B of quarterly revenue and $6.52 EPS, with revenue up 179% vs. prior year.
At a glance
B+ balance sheet — decent shape, but not bulletproof
40/100 earnings predictability — expect surprises
15.5x trailing p/e — the market's not buying it — or you found a deal
1.3% dividend yield — cash in your pocket every quarter
18.5% return on capital — nothing to write home about
xvary composite: 49/100 — below average
What they do
It lets hotel owners use Choice's brands and booking tools so you get fee income without owning the buildings.
Franchising → letting other people run hotels under your brand → so what: Choice gets paid without owning the buildings. That matters when you have 7,586 hotels and 653,810 rooms tied to 20 brands. Your booking page and loyalty points make leaving painful.
How they make money
$1.6B
annual revenue
Franchising fees
$0.88B
+5.0%
Reservation fees
$0.29B
+5.0%
Brand licensing
$0.19B
+6.0%
International fees
$0.16B
+8.0%
Other services
$0.08B
+2.0%
The products that matter
hotel franchising platform
Franchised Hotel System
7,586 hotels · 653,810 rooms
it's the operating backbone of the whole $1.6B business, spread across the U.S. and about 46 other countries.
system scale
brand and reservation network
Choice Brand Portfolio
39.5% operating margin
the brands matter because they turn a room network into fees, and that translated into a 39.5% operating margin on just $1.6B of revenue.
asset-light economics
shareholder payout stream
Dividend + Earnings Power
1.3% yield · $10.35 FY2028 EPS est
you are not buying CHH for a huge dividend. You are buying a business analysts think can earn $10.35 per share by FY2028.
execution bet
Key numbers
39.5%
operating margin
You keep 39.5 cents of every revenue dollar before interest and taxes. That is rich for a hotel company.
$1.9B
long debt
Borrowed money matters here. The company owes $1.9B, so rate cuts and rate hikes both still count.
18.5%
return on capital
For every dollar put to work, Choice gets 18.5 cents back in operating profit. That is the kind of math investors notice.
15.5x
trailing p/e
You are paying 15.5 times trailing earnings. Compare that with the 31% upside to the $140 target.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $1.9B (28% of capital)
- net profit margin 25.2% — keeps 25 cents of every dollar in revenue
- return on equity 35% — $0.35 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CHH 3 years ago → it's now worth $9,180.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Choice posted $1.2B of quarterly revenue and $6.52 EPS, with revenue up 179% vs. prior year.
The quarter shows a much larger revenue base than a year ago. EPS rose 69% vs. prior year, which says the fee model still throws off cash even when demand is choppy.
$1.2B
revenue
$6.52
eps
n/a
n/a
the number that mattered
Revenue was the number that mattered because $1.2B shows the business can still scale even when RevPAR stays weak.
-
revpar declines, mix headwinds, and a tougher comparison period.in the december quarter, revenues and earnings were likely down a bit as u.s. travel trends remained muted, and earnings faced pressure. foreign exchange effects, higher amortization tied to the canada acquisition, and increased costs and taxes weighed on results. nonetheless, the solid comparisons in the first half of the year should enable choice’s bottom line to stay ahead of the prior year.
-
we look for operational growth to pick back up in 2026.revenue and earnings should benefit from the company’s continued mix shift toward higher-royalty, higher-margined segments. the upscale, extended stay, and midscale tiers are promising, along with accelerating international unit growth. international revpar momentum, particularly in emea, canada, and asia-pacific, combined with a growing royalty base and pipeline conversion, should support steady revenue growth even if u.s.
-
revpar remains subdued.earnings growth is expected to benefit from normalization of tax and amortization impacts tied to the canadian acquisition, improved operating leverage, and disciplined capital allocation, including share repurchases. incremental contributions from new brands, loyalty-driven demand, and expanding direct franchising relationships further underpin our strong earnings outlook.
-
we are on the longer-term growth prospects here.although the stock is untimely for year-ahead relative price performance, the 18-month and 3 to 5-year periods are compelling. international unit growth, higher-margined brand mix, expanding royalties, and strong free cash flow support our projections.
source: company earnings report
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What could go wrong
the #1 risk here is franchise system slowdown across 7,586 hotels and 653,810 rooms. This is an asset-light model, so the pressure point is not empty buildings on Choice's books — it's weaker fee generation across the network.
med
franchise fee pressure
$1.6B of revenue is tied to a hotel system that has to stay productive. If franchisees struggle, the fee stream weakens fast because there is no giant owned-property cushion underneath it.
$1.6B of revenue is tied to a hotel system that has to stay productive. If franchisees struggle, the fee stream weakens fast because there is no giant owned-property cushion underneath it.
med
leverage is manageable, not trivial
Long-term debt sits at $1.9B, or 28% of capital. That is fine in normal conditions. It becomes less fine if room demand softens while investor patience is already thin.
Long-term debt sits at $1.9B, or 28% of capital. That is fine in normal conditions. It becomes less fine if room demand softens while investor patience is already thin.
med
estimate risk is real
Earnings predictability is 40/100. In plain English: this is not the kind of business where you should treat out-year EPS estimates like a promise.
Earnings predictability is 40/100. In plain English: this is not the kind of business where you should treat out-year EPS estimates like a promise.
med
the stock may stay cheap for a reason
A 15.5x trailing P/E looks reasonable, but three-year returns still lagged the index by $5,590 on a $10,000 starting investment. Cheap can stay cheap when confidence is missing.
A 15.5x trailing P/E looks reasonable, but three-year returns still lagged the index by $5,590 on a $10,000 starting investment. Cheap can stay cheap when confidence is missing.
Brand count helps, but RevPAR and leverage set the stock's mood.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
39.5% operating margin
This is the cleanest proof that the franchise model still works. If margins slip materially, the whole asset-light premium gets weaker.
risk
institutional selling streak
143 buyers versus 202 sellers in 3q2025 makes the message clear: large holders were reducing exposure, not adding to it.
calendar
whether FY2028 estimates hold
The forward case points to $2B in revenue and $10.35 EPS by FY2028. Watch revisions. The stock likely needs estimate stability before it gets re-rated.
trend
relative performance versus the index
Three years of underperformance is not background noise. If CHH starts closing that gap, sentiment is changing. If not, the multiple probably stays stuck.
Analyst rankings
earnings predictability
40 / 100
This score says earnings are less stable than you want from a mature brand owner. In human-speak: analysts do not see this as a clean, easy forecast.
risk rank
3
Risk rank 3 means the stock sits around the middle of the pack on safety. Not reckless. Not a bunker.
price stability
75 / 100
The share price has been steadier than many stocks. The irony is that stability did not translate into good returns.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 143 buyers vs. 202 sellers in 3q2025. total institutional holdings: 31.3M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$91
$188
$107
current price
$140
target midpoint · +31% from current · 3-5yr high: $255 (+140% · 25% ann'l return)
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