📊 CHH Key Takeaways
Is Choice Hotels International Inc. /de (CHH) a Good Investment?
Choice Hotels exhibits severe financial distress despite modest operating profitability, with unsustainable negative free cash flow (-$44.3M) combined with extreme leverage (14.58x Debt/Equity) and liquidity stress (0.95x current ratio). The company's minimal revenue growth (+0.8%), cash burn despite profitability, and deteriorating equity base ($137.4M vs $2.8B liabilities) indicate structural solvency risks that outweigh operational efficiency.
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
- Operating margin of 17.6% demonstrates pricing power and operational cost control
- Positive net income of $20.3M and operating income of $60.0M show underlying business profitability
- ROE of 14.8% indicates reasonable returns to shareholders within the capital structure
- 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
- Extreme leverage of 14.58x Debt/Equity with only $137.4M equity cushion supporting $2.8B in liabilities - unsustainable capital structure
- Negative free cash flow of -$44.3M with negative operating cash flow despite positive net income - company is burning cash and cannot service debt long-term
- Liquidity crisis emerging: current ratio of 0.95x indicates current liabilities exceed current assets with only $43.9M cash
- Anemic revenue growth of 0.8% YoY combined with capital intensity suggests limited organic deleveraging capacity
- Low ROA of 0.7% on $2.9B asset base indicates asset base is not generating returns sufficient to justify the capital structure
- 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
- Operating cash flow trend and whether company returns to positive OCF - critical for debt sustainability
- Debt/Equity ratio and absolute debt levels - watch for covenant violations given negative FCF
- Current ratio and working capital trends - liquidity stress may force asset sales or capital raises
- Revenue growth trajectory - must demonstrate top-line acceleration to support deleveraging
- Capital expenditure requirements and free cash flow path to breakeven
- 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 SELL from Claude (SELL) and ChatGPT (HOLD) with 75% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CHH's key strengths?
Claude: Operating margin of 17.6% demonstrates pricing power and operational cost control. Positive net income of $20.3M and operating income of $60.0M show underlying business profitability. 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: Extreme leverage of 14.58x Debt/Equity with only $137.4M equity cushion supporting $2.8B in liabilities - unsustainable capital structure. Negative free cash flow of -$44.3M with negative operating cash flow despite positive net income - company is burning cash and cannot service debt long-term. 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 $340.6M.
Does CHH pay dividends?
Choice Hotels International Inc. /de pays dividends, with $13.1M 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 $0.44.
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 May 2026, Choice Hotels International Inc. /de has a SELL rating with 75% confidence. Review the strengths and risks sections above before making a decision. This is not investment advice.
Is CHH stock overvalued or undervalued?
Valuation metrics for CHH: ROE of 14.8% (sector avg: 8%), net margin of 6.0% (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 SELL rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is CHH's free cash flow?
Choice Hotels International Inc. /de's operating cash flow is $-23.2M, with capital expenditures of $21.1M. FCF margin is -13.0%.
How does CHH compare to other Real Estate stocks?
Vs Real Estate sector averages: Net margin 6.0% (avg: 20%), ROE 14.8% (avg: 8%), current ratio 0.95 (avg: 1.5).
Is Choice Hotels International Inc. /de carrying too much debt?
CHH has a debt-to-equity ratio of 14.58x, 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.