Jabran Kundi
3 min read
In This Article:
We recently published a list of 20 Underperforming Stocks Targeted By Short Sellers. In this article, we are going to take a look at where Choice Hotels International, Inc. (NYSE:CHH) stands against other underperforming stocks targeted by short sellers.
Short interest refers to the percentage of publicly available shares that have been sold short. It is an indicator used by many investors to determine how strong a company’s bear thesis may be. Due to the nature of short selling, the short interest has become a popular indicator among investors.
The reason it is given so much weightage is that people betting against a stock have usually done solid research and are confident of a company’s downfall. They take unlimited risk, so when big investors or the smart money shorts a stock, people take notice. They try to unearth the red flags that may have prompted the high short interest.
We decided to dig deeper and try to find out where smart money sees trouble ahead. To come up with our list of 20 underperforming stocks targeted by short sellers, we looked at the worst-performing stocks of the last six months and then ranked them by the short interest.
A hotel lobby in vibrant colors, reflecting the hospitality and global presence of the hotel franchising company.
Short interest: 14.22%
6 months’ performance: -33.6%
Choice Hotels International, Inc. (NYSE:CHH) is a hotel franchisor. The company operates in two segments: Hotel Franchising & Management and Corporate & Other. It franchises lodging properties under the Comfort Suites, Sleep Inn, Econo Lodge, WoodSpring Suites, Comfort Inn, Radisson RED, and other brand names.
The firm reported strong Q4 results, beating management’s earnings guidance. Choice Hotels (NYSE:CHH) grew its net income by 16% and diluted EPS by 22%. Adjusted EBITDA set a new benchmark of growing 12% YoY. The leisure & business travel segment led a significant growth, with business travel accounting for 40% of the overall mix.
Despite solid earnings, the company’s 2025 outlook raises concerns. As per the guidance, projected net income for 2025 is $288-300MM with adjusted EBITDA ranging between $625-$640MM. However, achieving these targets is challenging due to the current economic uncertainty. Business travel growth may be impacted due to potential government layoffs and ongoing business uncertainty.
Choice Hotels (NYSE:CHH) also offers the possibility for guests to earn airline miles, but the recent poor guidance by Delta Air Lines means these rewards are also unlikely to attract customers.
