MeritValue

CHOICE HOTELS INTERNATIONAL INC /DE

CHHdata completeness 100%18 fiscal years on file
The thesis, from the filings

CHOICE HOTELS INTERNATIONAL INC /DE earns about 12% on invested capital, and has bought back 17% of its shares over 5 years. The applicable estimate puts fair value near $66.67 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$1.07B1$1.4B1$1.54B1$1.58B2$1.6B2
Net income$289M3$332.2M4$258.5M5$299.7M5$369.9M5
Operating cash flow$383.7M6$367.1M7$296.6M8$319.4M8$270.4M8
Capital expenditure—$65.8M9$68.6M10$106.8M10$106.9M10
Free cash flow (derived)—$301.2M7$228M8$212.7M8$163.6M8
Total debt$2.12B11$2.41B12$3.14B13$3.54B14$3.81B14
Cash & equivalents$511.6M15$41.6M16$26.8M17$40.2M18$45M18
Diluted shares55.9M55.1M50.7M48.1M46.6M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$38.91
your share of equity
Profit it earned you last year
$79.42
Free cash flow it threw off
$35.12
Debt you’d be carrying
$818.43

10 shares is a claim on $38.91 of net worth that earned you $79.42 and generated $35.12 of cash last year, against $818.43 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
12% avg · 5y
FY21 17%FY22 15%FY23 10%FY24 9%FY25 9%

It earned an average 12% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
−17% shares · 5y

Share count is down 17% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has risen 80% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth0.0%
  • fcfBase$212.7M
DCF · Growth Exit 5Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth0.0%
  • fcfBase$212.7M
Earnings Power Value
$66.67
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$299.7M
  • growthAssumed0.0%
Graham Number
$26.3
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001046311-24-000010 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2024-12-31 · accession 0001046311-26-000008 (Revenues)
  3. 10-K · period ending 2021-12-31 · accession 0001046311-24-000010 (NetIncomeLoss)
  4. 10-K · period ending 2022-12-31 · accession 0001046311-25-000007 (NetIncomeLoss)
  5. 10-K · period ending 2023-12-31 · accession 0001046311-26-000008 (NetIncomeLoss)
  6. 10-K · period ending 2021-12-31 · accession 0001046311-24-000010 (NetCashProvidedByUsedInOperatingActivities)
  7. 10-K · period ending 2022-12-31 · accession 0001046311-25-000007 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2023-12-31 · accession 0001046311-26-000008 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2022-12-31 · accession 0001046311-25-000007 (PaymentsForCapitalImprovements)
  10. 10-K · period ending 2023-12-31 · accession 0001046311-26-000008 (PaymentsForCapitalImprovements)
  11. 10-K · period ending 2021-12-31 · accession 0001046311-23-000008 (LongTermDebtNoncurrent)
  12. 10-K · period ending 2022-12-31 · accession 0001046311-24-000010 (LongTermDebtNoncurrent)
  13. 10-K · period ending 2023-12-31 · accession 0001046311-25-000007 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2024-12-31 · accession 0001046311-26-000008 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2021-12-31 · accession 0001046311-23-000008 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2022-12-31 · accession 0001046311-24-000010 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2023-12-31 · accession 0001046311-25-000007 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2024-12-31 · accession 0001046311-26-000008 (CashAndCashEquivalentsAtCarryingValue)