Extended Stay (STAY) Misses on Q3 Earnings & Sales Estimates

Extended Stay America, Inc. STAY operates hotels in the United States and Canada. The company operates under the Extended Stay America brand, Extended Stay Canada brand and the Crossland Economy Studios brand.

The transformational initiatives undertaken by Extended Stay have been boosting revenue per available room (RevPAR) at its properties. These initiatives include better service, improving margins through operational efficiency, increasing brand awareness through targeted marketing efforts and upgrading properties to optimize returns. The recently completed renovation activities are likely to boost occupancy going forward too. However, we note that the company’s lack of exposure to emerging markets might limit its revenue growth potential. Low corporate demand could continue to hurt performance too.

Investors should note that the consensus estimate for STAY has not witnessed any movement over the last 60 days. Meanwhile, STAY’s earnings have been strong over the past few quarters. In fact, the company posted positive earnings surprises in three of the last four quarters, with an average beat of 17.66%. Revenues have also outpaced the Zacks Consensus Estimate in three of the trailing four quarters.

Extended Stay America, Inc. Price and EPS Surprise

Extended Stay America, Inc. Price and EPS Surprise | Extended Stay America, Inc. Quote

STAY currently has a Zacks Rank #3 (Hold) but that could change following Extended Stay’s earnings report which was just released. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: STAY missed earnings. Our consensus earnings estimate called for earnings per share of 38 cents, and the company reported earnings of 35 cents per share. Investors should note that these figures take out stock option expenses.

Revenues: STAY reported revenues of $350.9 million. This missed our consensus estimate of $359.3 million.

Key Stats to Note: Revenue per available room (RevPAR) decreased 0.2% year over year in third-quarter 2017, driven by a 40 basis points (bps) decrease in occupancy of 220 while average daily rate (ADR) improved 0.2%. Meanwhile, hotel operating margin decreased 120 bps to 57.2%.

Stock Price Impact: In-active in pre-market trading.

Check back later for our full write up on this STAY earnings report!

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