TNL: 3 Stocks to Watch as the Travel Season Picks Up

The travel industry is benefitting from pent-up travel demand. Therefore, quality travel stocks Travel + Leisure Co. (TNL), Playa Hotels & Resorts N.V. (PLYA), and Bluegreen Vacations Holding Corporation (BVH) could be worth watching.

Despite the impact of inflation and growing living costs, it seems consumers are hesitant to make any cuts in their spending on travel. According to the World Travel and Tourism Council (WTTC) 2023 Economic Impact Research (EIR), the sector is expected to contribute $2.24 trillion to the US economy this year, exceeding the pre-pandemic record of $2.17 trillion in 2019.

Digital technologies such as artificial intelligence, big data, analytics, and the Internet of Things are influencing the expanding leisure travel business, promoting a paradigm shift in how stakeholders contact tech-savvy customers.

The global leisure travel market is anticipated to reach $1.74 trillion by 2027 at a 22.6% CAGR. Social media usage and unique experiences are driving the global leisure travel company, with millennials and millennial trends paving the way for opportunities.

Additionally, the worldwide travel & tourism market is predicted to grow at a 4.4% CAGR to $1.02 trillion by 2027. Hotels are the largest segment, with a forecasted market volume of $408.80 billion in 2023.

Let’s delve deeper into the fundamentals of the featured stocks.

Travel + Leisure Co. (TNL)

TNL offers hospitality services and products. It operates through two segments, Vacation Ownership, which develops and sells vacation ownership interests to individuals; and Travel and Membership, which includes travel businesses such as vacation exchange brands, travel technology platforms, memberships, and direct-to-consumer rentals.

2024 STOCK MARKET OUTLOOK

TNL’s forward non-GAAP P/E multiple of 7.35 is 49.6% lower than the industry average of 14.58. Its forward Price/Sales multiple of 0.81 is 8.9% lower than the industry average of 0.89.

TNL’s trailing-12-month EBIT margin of 19.03% is 162.8% higher than the industry average of 7.24%. Its trailing-12-month net income margin of 10.17% is 142.3% higher than the industry average of 4.20%.

TNL’s net revenues for the fiscal first quarter that ended March 31, 2023, increased 8.7% year-over-year to $879 million. Its adjusted EBITDA increased 8.2% from the year-ago value to $184 million. In addition, the company’s adjusted net income and adjusted EPS increased 16.6% and 29% year-over-year to $70 million and $0.89, respectively.

The consensus revenue estimate of $3.80 billion for the year ending December 2023 represents a 6.5% increase year-over-year. Its EPS is expected to grow 21.5% year-over-year to $5.49 for the same period. It surpassed EPS estimates in three of four trailing quarters. TNL’s shares have gained 18.2% over the past nine months to close the last trading session at $40.34.

TNL’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TNL has a B for Value, Momentum, and Quality. Within the B-rated Travel – Hotels/Resorts industry, it is ranked #7 out of 22 stocks. Click here for the additional POWR Ratings for Growth, Stability, and Sentiment for TNL.

Playa Hotels & Resorts N.V. (PLYA)

PLYA owns, develops, and operates resorts in prime beachfront locations in Mexico and the Caribbean. It also organizes weddings, lodging, dining, entertainment, meetings, events, and other hospitality services in its hotels.

PLYA’s forward EV/EBIT multiple of 10.45 is 22.1% lower than the industry average of 13.40. Its forward Price/Book multiple of 1.89 is 26.6% lower than the industry average of 2.58.

PLYA’s trailing-12-month levered FCF margin and EBITDA margins of 12.62% and 24.69% are 249.4% and 131.7% higher than the industry averages of 3.61% and 10.65%, respectively.

For the first quarter that ended March 31, 2023, PLYA’s revenue increased 24.7% year-over-year to $273.80 billion. Also, its adjusted EBITDA increased 28% from the year-ago value to $98.49 million.

The company’s adjusted net income amounted to $49.02 million and $0.31 per share, representing an increase of 54.1% and 63.2% from the prior-year period, respectively.

Street expects PLYA’s revenue to increase 12.1% year-over-year to $959.97 million for the year ending December 2023. Its EPS is expected to increase 5.3% year-over-year to $0.53 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past nine months, the stock has gained 39.9% to close the last trading session at $8.14.

It’s no surprise that PLYA has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Value, Momentum, and Quality. It is ranked #5 in the same industry.

Beyond what is stated above, we’ve also rated PLYA for Stability, Growth, and Sentiment. Get all PLYA ratings here.

Bluegreen Vacations Holding Corporation (BVH)

BVH is a vacation ownership organization that manages resorts in both leisure and urban regions and advertises and sells vacation ownership interests (VOI). It also provides financing to qualified VOI buyers and management services for vacation clubs and homeowners’ associations.

On May 15, 2024, BVH is excited to announce its expansion into the Nashville, Tennessee, market through its acquisition of two properties in the historic Printers Alley district.

Ray Lopez, Chief Operating Officer and Chief Financial Officer of BVH said, “We are pleased to add Nashville to the list of Bluegreen destinations. This acquisition is part of our overall strategy to offer our owners a diverse range of vacation experiences in some of the most desirable locations in the country.”

BVH’s forward EV/EBIT multiple of 8.56 is 36.1% lower than the industry average of 13.40. Its forward Price/Sales multiple of 0.63 is 29.1% lower than the industry average of 0.89.

BVH’s trailing-12-month EBIT margin of 27.71% is 282.9% higher than the industry average of 7.24%. Its trailing-12-month EBITDA margin of 29.90% is 180.6% higher than the industry average of 10.65%.

In the first quarter that ended March 31, 2023, BVH’s total revenue increased 12.3% year-over-year to $219.08 million. Its system-wide sales of VOIs came in at $166.95 million, up 10% year-over-year.

Also, its total assets came in at $1.40 billion for the period that ended March 31, 2023, compared to $1.39 billion for the period that ended December 31, 2022. Its total liabilities came in at $1.14 billion, compared to $1.15 billion for the same period.

Analysts expect BVH’s revenue to increase 4.8% year-over-year to $963.45 million for the year ending December 2023. Its EPS is expected to grow 18.5% year-over-year to $4.15 for the same period. The stock has gained 115.8% over the past nine months to close the last trading session at $35.65.

BVH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.

It is ranked #2 in the same industry. It has an A grade for Sentiment and a B for Value, Momentum, and Quality. To see additional BVH’s ratings for Growth and Stability, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

TNL shares were unchanged in premarket trading Monday. Year-to-date, TNL has gained 13.39%, versus a 16.79% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...