Why China Lodging Group, Ltd Shares Plunged as Much as 13% Today

What happened

China Lodging Group, Ltd (NASDAQ: HTHT) stock fell as much as 13.1% in trading Wednesday after the company reported fourth-quarter 2017 results. Shares bounced near their lows throughout the day and were down 11.6% as of 2:35 p.m. EDT.

So what

Revenue jumped 32.6% versus a year ago to $340.4 million, and net income soared 82.3% to $35.3 million, or $0.48 per share. There weren't any analyst estimates for earnings, but the average revenue estimate was $344.5 million, according to Yahoo! Finance, which is part of where the disappointment is likely coming from. Also missing expectations was guidance for 16% to 19% revenue growth in 2018, lower than the 26% estimate from Wall Street.

Luxury hotel lobby.

Image source: Getty Images.

Blended revenue per available room was up 14.4% in 2017, and both rising rates and a larger hotel base are driving revenue growth.

Now what

Growth on the top and bottom lines was strong for China Lodging Group, but that wasn't enough for investors today. I think estimates for growth just got ahead of themselves and the initial reaction from traders is to send shares lower. But the company is still growing by double digits, and with revenue per available room rising, we should see profit increasing going forward as well.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.