📊 CHH Key Takeaways
Is Choice Hotels International Inc. /de (CHH) a Good Investment?
Choice Hotels demonstrates strong fundamental profitability with a 23.2% net margin and exceptional returns on equity (204.1%), supported by robust free cash flow generation ($249.4M). However, the extremely high debt-to-equity ratio (10.52x) and weak current ratio (0.87x) present significant financial risks that constrain the rating despite solid operational performance.
Choice Hotels shows strong underlying profitability, with a 28.1% operating margin, 23.2% net margin, and solid free cash flow generation relative to revenue. However, growth is modest, with revenue up only 0.8% and net income up 0.5%, while the sharp EPS increase appears driven more by capital structure effects than broad operating expansion. The business looks fundamentally resilient, but elevated leverage, thin equity, and sub-1.0 liquidity temper the outlook.
Why Buy Choice Hotels International Inc. /de Stock? CHH Key Strengths
- Exceptional net profit margin of 23.2% indicates strong operational efficiency and pricing power
- Robust free cash flow generation of $249.4M with 15.6% FCF margin demonstrates cash-generative business model
- Strong interest coverage ratio of 22.2x shows current ability to service debt obligations
- High ROE of 204.1% reflects efficient use of equity capital despite leverage
- Modest revenue growth of 0.8% YoY shows stable market position in mature hospitality sector
- High-margin, asset-light earnings profile with 28.1% operating margin and 23.2% net margin
- Strong free cash flow generation of $249.35M with low capital expenditure requirements
- Excellent interest coverage of 22.2x, indicating debt is currently manageable from earnings
CHH Stock Risks: Choice Hotels International Inc. /de Investment Risks
- Critically high debt-to-equity ratio of 10.52x with $1.9B long-term debt against only $181.2M equity creates significant financial distress risk
- Liquidity concern: current ratio of 0.87x below 1.0x indicates potential short-term obligations coverage issues despite positive FCF
- Minimal cash position of $45.0M relative to $2.7B total liabilities suggests limited financial flexibility for adverse scenarios
- Modest net income growth of only 0.5% YoY coupled with revenue growth of 0.8% indicates slowing top-line momentum
- High proportion of liabilities (93% of assets) creates vulnerability to operational disruptions or interest rate increases
- Very high leverage, with $1.91B in long-term debt and 10.52x debt-to-equity
- Weak liquidity position, with current and quick ratios both at 0.87x and only $45.00M in cash
- Low underlying growth quality, as EPS growth materially outpaced revenue and net income growth
Key Metrics to Watch
- Debt-to-equity ratio trend and refinancing capacity for maturing obligations
- Free cash flow sustainability and ability to reduce leverage
- Revenue growth acceleration and margins stability in competitive hotel market
- Operating cash flow consistency and working capital management
- Interest coverage ratio maintenance as debt service obligations come due
- Revenue and net income growth versus EPS growth to assess underlying operating quality
- Debt reduction, liquidity levels, and equity base sustainability
Choice Hotels International Inc. /de (CHH) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The current ratio below 1.0x warrants monitoring of short-term liquidity.
CHH Profit Margin, ROE & Profitability Analysis
CHH vs Real Estate Sector: How Choice Hotels International Inc. /de Compares
How Choice Hotels International Inc. /de compares to Real Estate sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Choice Hotels International Inc. /de Stock Overvalued? CHH Valuation Analysis 2026
Based on fundamental analysis, Choice Hotels International Inc. /de has mixed fundamental signals relative to the Real Estate sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Choice Hotels International Inc. /de Balance Sheet: CHH Debt, Cash & Liquidity
CHH Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Choice Hotels International Inc. /de's revenue has grown significantly by 39% over the 5-year period, indicating strong business expansion. The most recent EPS of $5.07 reflects profitable operations.
CHH Revenue Growth, EPS Growth & YoY Performance
CHH Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2024 | $425.6M | $31.0M | $1.81 |
| Q2 2024 | $427.4M | $31.0M | $1.65 |
| Q1 2024 | $331.9M | $31.0M | $0.62 |
| Q3 2023 | $414.3M | $52.8M | $1.81 |
| Q2 2023 | $368.0M | $52.8M | $1.65 |
| Q1 2023 | $257.7M | $52.8M | $1.02 |
| Q3 2022 | $323.3M | $22.3M | $1.85 |
| Q2 2022 | $278.2M | $22.3M | $1.53 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Choice Hotels International Inc. /de Dividends, Buybacks & Capital Allocation
CHH SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Choice Hotels International Inc. /de (CIK: 0001046311)
📋 Recent SEC Filings
❓ Frequently Asked Questions about CHH
What is the AI rating for CHH?
Choice Hotels International Inc. /de (CHH) has a Combined AI Rating of BUY from Claude (BUY) and ChatGPT (HOLD) with 75% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CHH's key strengths?
Claude: Exceptional net profit margin of 23.2% indicates strong operational efficiency and pricing power. Robust free cash flow generation of $249.4M with 15.6% FCF margin demonstrates cash-generative business model. ChatGPT: High-margin, asset-light earnings profile with 28.1% operating margin and 23.2% net margin. Strong free cash flow generation of $249.35M with low capital expenditure requirements.
What are the risks of investing in CHH?
Claude: Critically high debt-to-equity ratio of 10.52x with $1.9B long-term debt against only $181.2M equity creates significant financial distress risk. Liquidity concern: current ratio of 0.87x below 1.0x indicates potential short-term obligations coverage issues despite positive FCF. ChatGPT: Very high leverage, with $1.91B in long-term debt and 10.52x debt-to-equity. Weak liquidity position, with current and quick ratios both at 0.87x and only $45.00M in cash.
What is CHH's revenue and growth?
Choice Hotels International Inc. /de reported revenue of $1.6B.
Does CHH pay dividends?
Choice Hotels International Inc. /de pays dividends, with $53.5M distributed to shareholders in the trailing twelve months.
Where can I find CHH SEC filings?
Official SEC filings for Choice Hotels International Inc. /de (CIK: 0001046311) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is CHH's EPS?
Choice Hotels International Inc. /de has a diluted EPS of $7.90.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is CHH a good stock to buy right now?
Based on our AI fundamental analysis in April 2026, Choice Hotels International Inc. /de has a BUY rating with 75% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is CHH stock overvalued or undervalued?
Valuation metrics for CHH: ROE of 204.1% (sector avg: 8%), net margin of 23.2% (sector avg: 20%). Higher ROE suggests strong returns relative to peers.
Should I buy CHH stock in 2026?
Our dual AI analysis gives Choice Hotels International Inc. /de a combined BUY rating for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is CHH's free cash flow?
Choice Hotels International Inc. /de's operating cash flow is $270.4M, with capital expenditures of $21.1M. FCF margin is 15.6%.
How does CHH compare to other Real Estate stocks?
Vs Real Estate sector averages: Net margin 23.2% (avg: 20%), ROE 204.1% (avg: 8%), current ratio 0.87 (avg: 1.5).
Is Choice Hotels International Inc. /de carrying too much debt?
CHH has a debt-to-equity ratio of 10.52x, which is above the Real Estate sector average of 1.5x. Combined with a current ratio below 1, this warrants careful monitoring of the balance sheet.
Why is CHH's return on equity (ROE) so high?
Choice Hotels International Inc. /de has a return on equity of 204.1%, significantly above the Real Estate sector average of 8%. A high ROE indicates the company is efficient at generating profits from shareholder equity. This is supported by a 23.2% net margin.