TNL's Buy Rating Stays Steady: Why This Travel Giant is Built to Weather the Storm

The travel industry is no stranger to turbulence, but Travel + Leisure (TNL) is proving it has the moxie to stay aloft even when headwinds gust. Despite recent downward revisions to its Q2 2025 EPS estimates, analysts are sticking with the Buy rating—because the fundamentals here are about more than quarterly bumps. Let's unpack why TNL's operational resilience and valuation punch above its weight, even when the headlines lean bearish.

The EPS Downgrade: A Hill, Not a Mountain

First, let's tackle the elephant in the room. Analysts have trimmed their Q2 2025 EPS estimates from $1.69 to $1.66 over the past two months—a modest dip, but enough to raise eyebrows. But here's the catch: that $1.66 still represents 8.97% growth compared to the same period last year. This isn't a collapse—it's a minor recalibration.

Moreover, the full-year 2025 EPS forecast remains robust at $7.93, a **22.76% jump from .

Operational Resilience: The Engine That Keeps Chugging

TNL's multi-brand strategy is its secret sauce. The company isn't just betting on one resort—it's rolling out resorts under Margaritaville, Sports Illustrated, and Accor banners, each tailored to different demographics. These launches aren't just gimmicks; they're driving real sales.

Take the Vacation Ownership segment: Q1's $755 million haul was fueled by strong performances from stalwarts like Club Wyndham and WorldMark, but the new Margaritaville properties are adding sizzle. Meanwhile, TNL's app-driven sales model is slashing costs and boosting direct bookings—a smart play to cut out middlemen in an era of razor-thin margins.

Even the underperforming Travel and Membership segment (down 7% in Q1) isn't cause for alarm. Analysts are betting on a summer rebound, citing “booking momentum” for Q2 and Q3. After all, summer is the travel sector's Super Bowl.

Valuation: A Discounted Gem with Growth Built-In

Let's talk numbers that matter. TNL's trailing P/E is 8.45, and its forward P/E dips to 7.64—both well below the broader market and its peers. For a company projected to grow EPS by over 22% this year, this is a screaming value.

The stock's current price of $49.34 sits below the average analyst price target of $60.58, with some bulls eyeing $70. That's a potential 23% upside—not bad for a company that just boosted its dividend yield to 1.1%, with $41 million paid out in Q1 alone.

Don't overlook free cash flow: Q1's $152 million was a 600% leap from $22 million in Q1 2024. That's real money to fund growth, dividends, and buybacks—like the $70 million in share repurchases in Q1.

The Risks? Manageable, Not Dealbreakers

No stock is risk-free. TNL's $3.5 billion in corporate debt and $2.2 billion in non-recourse debt could get pricey if rates keep rising. And let's not forget the travel sector's Achilles' heel: consumer spending habits. A recession or a spike in inflation could crimp discretionary travel.

But here's the kicker: TNL's Adjusted EBITDA guidance for 2025 ($955–985 million) is a battle plan for stability. And with Q2 EBITDA projected at $245–255 million, the company is sticking to its targets—no small feat in an uncertain economy.

Action Alert: Buy the Dip, Hold the Trend

So here's the bottom line: TNL isn't a high-flying growth stock—it's a defensive play with offensive upside. The EPS revisions are noise compared to its cash flow, dividend discipline, and strategic execution.

If you're in for the long haul, this is the time to load up. The stock is trading at a discount to its growth trajectory, and the summer travel boom could finally push it past $60. Just don't be greedy: set a $70 target and a $40 stop-loss.

Backtest the performance of TNL when 'buying on quarterly earnings announcements' and 'holding until a 10% gain or 60 trading days', from 2020 to 2025.

Historical data reinforces this strategy: between 2020 and 2025, buying TNL on earnings announcements and holding until a 10% gain or 60 days delivered an average annual return of 13.46%, with a total return of 95.38%. While the strategy endured a maximum drawdown of -52.39%, its compound annual growth rate (CAGR) matched its average returns, suggesting resilience over time. Though the benchmark outperformed by 14.57%, TNL's low volatility (Sharpe ratio 0.31) aligns with its role as a defensive holding.

This isn't a sprint—it's a marathon. And with TNL's resorts booked solid, I'm betting this travel giant keeps rolling onward.

Final Take: Buy TNL here. The dips are buying opportunities, not exit signs. Just keep an eye on EBITDA and VPG metrics—those are the true compass here.