Wyndham Cuts RevPAR Outlook, Execs Sell Shares as Leverage Rises

Wyndham Hotels & Resorts Inc (WH) is facing renewed scrutiny over shareholder returns and management decisions following a string of insider transactions and updated guidance. The company revised its full-year forecasts, now expecting a 2-3% decline in global RevPAR, with adjusted EBITDA projected to land between $715 million and $725 million. Despite this, it maintained its earnings per share (EPS) guidance of $4.48 to $4.62 according to the latest report.

Recent filings show that Wyndham executives, including Paul F Officer and Scott R Strickland, have engaged in stock gifts and sales, raising questions about confidence in the stock's short-term prospects. Strickland alone filed to sell 30,000 shares between December 8 and 9. Meanwhile, the company returned $101 million to shareholders through dividends and buybacks in the first three quarters of the year according to financial data.

Investors remain divided on Wyndham's direction. Analysts have issued a mix of "Buy" and "Hold" ratings, with an average price target of $94.26, implying 23.51% upside from its current level. The stock trades at a 17.1x P/E ratio, above the peer average of 16.5x.

What This Means for Investors

The company's dividend appears relatively secure compared to its peers, with a 2.17% yield and a payout ratio of just 4.33%. However, recent executive transactions may signal a lack of conviction in the stock's near-term performance. Wyndham has raised its dividend for five consecutive years, but analysts remain cautious about its ability to sustain the current level.

With the stock down 27% in the last 12 months and a P/E ratio of 17.65, Wyndham appears undervalued relative to its historical performance. The market has been skeptical about the company's ability to grow revenue and maintain profitability amid a challenging economic climate.

Risks to the Outlook

The main risks lie in the company's guidance and leverage metrics. Wyndham expects leverage to reach 2.1 times EBITDA by year-end, well above its target range of 0.75 to 1.25 times. This raises concerns about its ability to service debt and fund future growth initiatives. Additionally, the company revised its RevPAR forecast downward, signaling weaker demand than previously anticipated.

Insider sales, including those by top executives, have also drawn attention. Scott R Strickland's recent filings to sell 30,000 shares within a short window could be seen as a lack of confidence in the company's long-term prospects. While insider selling is not uncommon, the timing and volume of these transactions may impact investor sentiment.

Despite these challenges, Wyndham continues to expand its global footprint, with new hotel developments in Dubai and other international markets. Its brand portfolio and scale remain competitive, and the company appears well-positioned to benefit from a recovery in travel demand.