Tags: Wyndham | charms | investors | WYN

Wyndham Firms Up Finances, Charms Investors

By    |   Friday, 10 February 2012 08:21 AM

Wyndham Worldwide (WYN), the holding company that owns hotel brands Howard Johnson and Days Inn, has been firming up its finances by freeing up cash flow to buy back stocks and become a more streamlined, investor-friendly company.

Revenue during the fourth quarter rose 7 percent to $1 billion from a year earlier and the board voted to increase the dividend by 53 percent, to 23 cents per share from 15 cents. Earnings per share rose to 47 cents from 46 cents a year before.

Wyndham Worldwide has spent the past several quarters tidying up its finances. “We remain well positioned for growth and that confidence is reflected in the 53 percent dividend increase authorized by our Board of Directors,” Chairman and CEO Stephen P. Holmes said in an earnings statement.

Ratings agencies have taken note, including Moody's, which upgraded Wyndham Worldwide and assigned the company's debt an investment-grade rating in late 2011.

"The rating upgrade reflects a modest improvement in credit metrics in 2011, and Moody's expectations that revenues, earnings, and normalized free cash flow will increase again in 2012," Moody's Senior Analyst Peggy Holloway says in a note on the company.

The upgrade also reflects Moody's view that Wyndham Worldwide is a healthy company with enough liquidity to cushion it from external shocks, such as a swift economic downturn.

Good thing, too, because the global economy is mired in uncertainty, especially with Europe teetering on the edge of recession.

Standard & Poor's likes the company's financial position as well.

"Standard & Poor's views Wyndham's business profile as satisfactory, incorporating a good level of business diversity and our positive view of management as a prudent business operator," Standard & Poor's analysts write in a company note, adding Wyndham deserves praise for playing a leading role in different industry segments, such high-end and economy hotel niches, vacation rentals and timeshare exchanges.

Wall Street view

Wall Street banks are keen the company. In November, Jefferies initiated coverage at buy, while in September 2011, Deutsche Bank gave the company a buy recommendation and in July of last year FBR Capital reiterated an outperform recommendation.

The company will next report on on May 9.

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Friday, 10 February 2012 08:21 AM
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