WYN was recommended by Dow Theory Forecasts at $47.42 in Investment Digest issue 717, dated April 18, 2012.
“Wyndham Worldwide Corp. (WYN, $54) has trended mostly higher over the last year and may not be done yet. But in the wake of an 84% return over the last 12 months, the shares have become somewhat expensive for our tastes. To be clear, valuation was never Wyndham’s most appealing attribute — we were drawn to its growth. Over the last four quarters, Wyndham’s per-share profits jumped 31%, with operating cash flow up 23%.
“The consensus projects profit growth of 27% this year and 13% next year. Given strong occupancy and pricing trends in the hotel business and aggressive share buybacks (share count down 14% over the last year), the profit targets seem reachable, and a move to $60 in the next six months would not surprise us. In fact, the hospitality concern remains among our favorite 25 or so stocks, and we still expect market-beating performance over the next year.
“But the valuation takes some of the edge off Wyndham. At 17 times expected 2012 earnings, the stock still trades at a discount of 26% to its peer-group median. But it looks expensive relative to its own historical norms for price/earnings, price/sales and price/operating cash flow. Wyndham no longer ranks among our favorite 15 and is losing its place on the Focus List; the stock remains a Buy and a Long-Term Buy.”
- Richard J. Moroney, Dow Theory Forecasts, September 13, 2012