Choice Hotels (CHH) Down 12.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Choice Hotels (CHH). Shares have lost about 12.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Choice Hotels due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Choice Hotels International, Inc. before we dive into how investors and analysts have reacted as of late.

Choice Hotels Q3 Earnings Miss Estimates, Revenues Top

Choice Hotels reported third-quarter 2025 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top line increased year over year, while the bottom line fell from the prior-year quarter’s figure.

CHH’s Q3 Earnings & Revenues

Choice Hotels reported adjusted earnings per share (EPS) of $2.10, missing the Zacks Consensus Estimate of $2.18. It reported adjusted EPS of $2.23 in the prior-year quarter.

Quarterly revenues of $447 million beat the consensus mark of $417 million. The metric rose 4.4% from the year-ago level of $428 million.

Operating Results of CHH

Adjusted EBITDA reached a third-quarter record of $190.1 million, up 7% year over year, driven by disciplined cost control and an improved mix of higher-revenue brands. The company’s U.S. average royalty rate expanded by 10 basis points to 5.15%, reflecting robust franchise performance.

Global RevPAR (revenue per available room) rose 0.2%, supported by a 9.5% increase internationally (up 5.1% on a constant-currency basis). Domestic RevPAR declined 3.2%, primarily due to softness in government and inbound travel demand.

Growth and Franchising Details

Choice Hotels’ global net room count grew 2.3% year over year, including 3.3% growth in upscale, extended-stay and midscale segments. International rooms surged 8.3%, aided by a 66% rise in openings. 

The development pipeline exceeded 86,000 rooms, 98% of which are in higher-revenue segments. Franchise agreements awarded increased 54% year over year, reflecting solid global demand.

CHH’s Balance Sheet and Shareholder Returns

As of Sept. 30, 2025, the company reported total liquidity of $564 million and maintained a net debt-to-adjusted EBITDA ratio of 3.0x. Operating cash flow totaled $68.7 million for the quarter and $184.8 million year to date.

During the quarter, Choice Hotels returned $150.4 million to its shareholders through share repurchases and dividends. Approximately 3 million shares remain available under the existing authorization.

CHH’s 2025 Outlook

For full-year 2025, Choice Hotels raised its adjusted net income guidance to $353 million-$371 million (up from $261 million-$276 million) and expects adjusted EBITDA between $620 million and $632 million. Adjusted diluted EPS is projected in the range of $6.82-$7.05, slightly narrowed from the prior guidance of $6.88-$7.20.

The company now anticipates U.S. RevPAR to decline 2%-3% year over year. Global net systemwide room growth remains projected at around 1%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, Choice Hotels has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Choice Hotels has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Choice Hotels belongs to the Zacks Hotels and Motels industry. Another stock from the same industry, Marriott International (MAR), has gained 5.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

Marriott reported revenues of $6.49 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $2.47 for the same period compares with $2.26 a year ago.

Marriott is expected to post earnings of $2.65 per share for the current quarter, representing a year-over-year change of +8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.

Marriott has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

Quantum Computing Stocks Set To Soar

Artificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.

Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com