CluenexChoice Hotels CHH
Choice Hotels scores average on business quality (5.0 of 10). Here is why, in plain words, and what our sealed record shows.
Why it matters
- What Choice Hotels does
Choice Hotels franchises lodging brands like Comfort Inn and Quality Inn, collecting royalty fees from hotel owners. It monetizes a massive global portfolio of economy and midscale properties without owning the underlying real estate.
- What it does best
Choice dominates asset-light franchising, generating a top-decile return on equity of 215% while peers like Hyatt sit at just 2%. This model extracts high-margin royalties from property owners, creating a capital-efficient earnings engine that is tough to replicate.
- The main risk
A heavy debt load creates vulnerability, with total debt at $1.9 billion against just $45 million in cash. With interest coverage at 4.3x, rising debt costs or an unexpected downturn in franchise fee collections would squeeze cash flow rapidly.
Quality, check by check
Scored against its own industry, from company filings.
Gross margin reaches 56.6% with an operating margin of 25.5%, showing strong pricing power. Profitability remains high as the asset-light model scales efficiently without heavy capital outlays.
Franchise scale and brand switching costs lock in property owners through long-term contracts. Operating margins sit in the sector's top decile at 25.5%, proving the pricing power of its reservation network.
Revenue growth crawls at 0.8%, landing in the bottom quartile of its sector. Top-line expansion has slowed sharply compared to historical levels, dragging down overall momentum.
Debt-to-equity sits at a high 10.5x, leaving little balance-sheet cushion. Free cash flow dropped to $115 million, down from prior years, pointing to a softer financial profile.
Insiders
Executives and directors, from SEC Form 4 filings we read ourselves. Open market trades only; grants, option exercises and pre-planned sales left out.
1 sold $541K outside pre-planned sales.
Our sealed record on CHH
Verdicts appear here 30 days after we publish them; members see today's. Each one is in the nightly ledger, fingerprinted the night it was made.
The first sealed verdicts appear here on Oct 11, 2026.
Questions
Choice Hotels scores average on the Cluenex quality check (5.0 of 10), measured against its own industry. Profitability is strong, moat strong, growth slow and financial health weak.
In the last 90 days of SEC Form 4 filings: 1 sold $541K outside pre-planned sales.
Nov 2, 2026.
See CHH today
- Today's verdict on CHH, and why
- Fair value with cautious, base and optimistic cases
- The exact price that would change the verdict
- Which stocks each signal names, the night it fires
Cite this page: Cluenex, “Choice Hotels (CHH)”, https://cluenex.com/stocks/chh/, data as of Oct 10, 2026.