In my opinion, Interval Leisure has stronger growth prospects than Wyndham Worldwide Corporation (NYSE:WYN) in the timeshare exchange business. This is because Wyndham Worldwide’s dual role as both as a timeshare exchange operator and timeshare developer makes it difficult for competing major timeshare developers to list their properties on RCI. This is validated by flat revenue growth for Wyndham Worldwide’s vacation exchange and rental business in 2012.
Similar to Interval Leisure, Marriott Vacations Worldwide Corp (NYSE:VAC) is a spin-off of Marriott International Inc (NYSE:MAR)‘s time share unit. Interval Leisure was spun off by IAC/InterActiveCorp (NASDAQ:IACI) in 2008. However, Marriott Vacations is more of a timeshare developer. Marriott Vacations derived 49% and 20% of its revenues from sales of vacation ownership products and resort management respectively. Rental of vacation ownership inventory and the financing of consumer purchases of vacation ownership products accounted for the remaining share of its revenues. Going forward, its key target is the enhancement of development margins through the leveraging of fixed selling costs and the reduction of cost of goods sold through increased sales efficiency. Management revised its guidance for development margins from between 16.5% and 17.5% to between 17.0% and 18.0%, following better than expected results in the first quarter of fiscal 2013.
Interval Leisure Group, Inc. (NASDAQ:IILG) is attractively valued, at a trailing twelve months EV/EBITDA of 8.7. Additionally, Interval Leisure has a competitive edge over its competitors, given its independence as a pure timeshare exchange network operator, with major timeshare developers more likely to list their properties on Interval Leisure’s network, in favor of competing timeshare network operators with significant timeshare developer business.
Mark Lin has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Should You Give This Stock a Share Of Your Time? originally appeared on Fool.com and is written by Mark Lin.
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