Barclays analyst Brandt Montour has revised the price target for Travel + Leisure (TNL, Financial), reducing it from $54 to $39. This comes despite the company's stable messaging, which contrasts with the broader market's unease. Montour maintains an Underweight rating on TNL shares, reflecting concerns over rising delinquencies and declining rates of new owner closings. These factors make achieving the company's current fiscal year guidance seem increasingly challenging, according to the analyst's research note following the recent Q1 report.
TNL Key Business Developments
Release Date: April 23, 2025
- Adjusted EBITDA: $202 million, at the high end of guidance range.
- Adjusted EBITDA Margin: Increased from 21% to 22% year-over-year.
- Adjusted Diluted Earnings Per Share: $1.11, a 14% increase.
- Vacation Ownership Segment Revenue: $755 million, a 4% increase.
- Vacation Ownership Adjusted EBITDA: $159 million, an 18% increase.
- Volume Per Guest (VPG): $3,212, above $3,000.
- Tour Flow: Down 1% for the quarter, but year-over-year growth in March.
- Travel and Membership Segment Revenue: $180 million, down 7%.
- Travel and Membership Adjusted EBITDA: $68 million, down 9%.
- Exchange Transactions: Declined by 13%.
- Travel Club Transaction Growth: 3% increase.
- Operating Cash Flow: $121 million.
- Adjusted Free Cash Flow: $152 million.
- Dividend Increase: 12% to $0.56 per share.
- Share Repurchases: $70 million or 1.3 million shares in Q1.
- Leverage Ratio: 3.3 times, expected to end the year below 3.4 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Travel+Leisure Co (TNL, Financial) delivered $202 million of adjusted EBITDA, reaching the high end of their guidance range.
- The Vacation Ownership business showed strong performance with VPGs well above $3,000, contributing to a 22% increase in consolidated adjusted EBITDA margins.
- The company increased its dividend by 12% to $0.56 per share and repurchased $70 million worth of shares, returning significant capital to shareholders.
- The Club Wyndham app has seen increased adoption, with nearly 100,000 downloads, leading to a 71% search-to-book conversion rate, a 22% increase compared to the owner website.
- Travel+Leisure Co (TNL) maintained strong forward bookings and travel trends, indicating consumer resilience despite macroeconomic uncertainties.
Negative Points
- The Travel and Membership segment experienced a 7% decline in revenue and a 9% decrease in adjusted EBITDA, driven by a 13% decline in exchange transactions.
- Tour flow in the Vacation Ownership segment was down 1% for the quarter, although there was year-over-year growth in March.
- The improvement in portfolio delinquencies typically seen from December to March did not occur, leading to an increased provision rate assumption of 21%.
- The booking window decreased from 130 to 116 days compared to the previous year, indicating a potential shift in consumer booking behavior.
- There is increased uncertainty in the macroeconomic outlook and consumer sentiment has progressively fallen in 2025, which could impact future performance.
