They are among the few gainers on an off day for stock markets.
On any given day, the list of the biggest movers on the stock markets is filled with AI stocks, tech names, biopharma stocks, quantum computing tickers, and stocks in other high-growth industries.
But on Wednesday, the biggest movers included several companies that sell timeshares and vacation ownership real estate. What’s driving investors to buy timeshare stocks?
It is likely due to a strong third quarter earnings report from the timeshare leader, Travel + Leisure Co (NYSE:TNL), which saw its stock price surge 13% on Wednesday.
Travel + Leisure owns various vacation ownership resorts, including WorldMark, Club Wyndham, Margaritaville by Wyndham, Accor Vacation Club, Sports Illustrated Resorts, and Shell Vacations Club, among others. It also owns the timeshare vacation exchange portal, RCI.
In the third quarter, a surge in vacation ownership helped Travel + Leisure beat revenue and earnings expectations and raise its guidance for the fiscal year.
Specifically, the company posted revenue of $1.04 billion, up 5% year-over-year. This beat estimates of $1.03 billion. Vacation ownership revenue jumped 6% to $876 million.
Within that segment, net vacation ownership interest (VOI) sales, which is basically timeshare units sold, rose 9% to $494 million. Gross VOI was $682 million, up 13% year-over-year. Further, a key metric, volume per guest (VPG), rose 10% to $3,304.
Net income increased 14% to $111 million, or $1.70 per share. Further, adjusted EBITDA was $266 million, up 10%, and adjusted earnings were $1.80 per share, which beat consensus estimates of $1.74 per share.
The strong Q3 was just part of it, as Travel + Leisure also lifted its guidance for the fiscal year. The company is now calling for:
- Adjusted EBITDA of $965M to $985M, up from the previous outlook of $955M to $985M.
- Gross VOI sales of $2.45B to $2.50B, up from $2.4 billion to $2.5B.
- VPG of $3,250 to $3,275, up from the prior outlook of $3,200 to $3,250.
The strong performance helped lift other timeshare stocks, including Hilton Grand Vacations (NYSE:HGV), a timeshare company that has a licensing agreement with Hilton Worldwide (NYSE:HLT). Hilton Grand Vacations stock rose 5% on Wednesday, fueled in part by TNL’s results. It also got a boost from Hilton Worldwide, which saw its stock jump 4% after beating third quarter earnings estimates Wednesday. Hilton Grand Vacations reports its Q3 earnings on October 30.
In addition, Marriott Vacations (NYSE:VAC), which sells Marriott timeshares through a licensing agreement, rose 3% on Wednesday. Marriott Vacations reports earnings November 5, while Marriott International (NYSE:MAR), a separate company, reports earnings November 4.
The surge for these timeshare stocks came on a day when the markets were tanking, so they were among a relatively small pool of winners.
Travel + Leisure stock gets high marks from analysts, who rate it as an overwhelming buy with a median price target of $69 per share, suggesting 14% upside. It is also cheap, trading at 10 times earnings.
