Despite macroeconomic headwinds, Bluegreen Vacations Holding Corporation (BVH) maintained its business momentum in the first quarter of fiscal 2023, as demonstrated by solid growth in system-wide sales of VOIs, with sales volume per guest and guest tours up. Moreover, continued expansion initiatives position the company for sustained growth and profitability.
Given its sound fundamentals and bright growth prospects, this travel stock is worth owning. In this article, I will discuss several reasons I am extremely bullish on BVH.
With a $455.53 million market cap, BVH operates as a vacation ownership company. It markets and sells vacation ownership interests (VOI); and manages resorts in leisure and urban destinations, including Las Vegas, Orlando, Myrtle Beach, Charleston and New Orleans, and others.
In January 2023, BVH commenced VOI sales operations at its newly acquired Bayside Resort & Spa in Panama City Beach, Florida. Also, on February 15, the company extended its relationship with NASCAR® for another six years as the Official Vacation Ownership Provider of NASCAR®, offering exclusive experiences for its owners and guests and opportunities to market the Bluegreen Vacation Club.
Furthermore, on February 27, the company announced the groundbreaking for the Bluegreen Mill Springs Lodge Resort in Pigeon Forge, Tennessee, with a planned 67 accommodations and amenities for its owners and guests to start enjoying time in the Smoky Mountains in 2024.
Mill Springs Lodge is among the three new developments being added to BVH’s portfolio, which already includes 43 Club Resorts in iconic destinations across the United States.
The expansion continued in the second quarter, with the recent announcement that Bluegreen/Big Cedar Vacations LLC, a joint venture between the company and Bass Pro Shops, acquired Branson Cedars Resort in Branson, Missouri. The acquisition marks the fourth resort the company has added to its portfolio within the last six months.
These expansion initiatives are expected to produce higher revenues and earnings in the future.
Alan B. Levan, Chairman and CEO of BVH, said, “I’m also pleased that we were able to increase our quarterly dividend to our shareholders by over 33%, demonstrating our goal of improving shareholder returns over time.” In February, the company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, an increase from the previous quarterly dividend of $0.15 per share.
The quarterly dividend was paid on March 30 to all shareholders of record at the close of trading on March 6, 2023. BVH’s current dividend translates to a 2.46% yield annually, while its four-year average dividend yield is 0.85%. The company’s dividend payouts have grown at CAGRs of 47.5% and 39.9% over the past three and five years, respectively.
Shares of BVH have gained 27.5% over the past six months and 12.3% over the past nine months to close the last trading session at $26.39. Moreover, Wall Street analysts expect the stock to hit $51.00 in the near term, indicating a potential upside of 93.3%.
Here is what could shape BVH’s performance in the near term:
Robust Financials
In the first quarter that ended March 31, 2023, BVH’s total revenue increased 12.3% year-over-year to $219.10 million. Its system-wide sales of VOIs came in at $166.95 million, up 10% year-over-year. The increase reflected an increase in its sales efficiency, as demonstrated by the 4% increase in its sales volume per guest and a 6% increase in guest tours over the previous year’s quarter.
Furthermore, as of March 31, 2023, the company’s cash and cash equivalents came in at $166.66 million, and its total assets stood at $1.40 billion.
Favorable Analyst Estimates
Analysts expect BVH’s EPS for the fiscal year (ending December 2023) to come in at $4.43, representing an increase of 26.5% year-over-year. The consensus revenue estimate of $920.89 million for the ongoing year indicates a marginal year-over-year increase. Moreover, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.
In addition, the company’s EPS and revenue for the fiscal year 2024 are expected to rise 20.1% and 2% year-over-year to $5.32 and $938.82 million, respectively.
Robust Profitability
In terms of the trailing-12-month gross profit margin, BVH’s 87.40% is 148.6% higher than the 35.16% industry average. The stock’s 27.71% trailing-12-month EBIT margin is 259.7% higher than the industry average of 7.70%. Likewise, its 6.16% trailing-12-month net income margin is 37.9% higher than the industry average of 4.47%.
Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 27.43%, 15.37%, and 4.27% compare to the industry averages of 11.05%, 6.34%, and 4.02%, respectively.
Discounted Valuation
In terms of forward non-GAAP P/E, BVH’s 5.96x is 56.9% lower than the industry average of 13.81x. The stock’s forward EV/EBITDA of 8.77x is 4.9% lower than the industry average of 9.22x. Also, its forward EV/EBIT and Price/Sales multiple of 7.07 and 0.49 are 44.1% and 41.8% lower than industry averages of 12.64 and 0.84, respectively.
POWR Ratings Show Promise
BVH’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BVH has a grade of A for Sentiment, in sync with its solid financials and optimistic analyst expectations. In addition, the stock has a B grade for Quality and Value, consistent with higher profitability and lower valuation relative to its peers.
BVH is ranked #2 of 21 stocks in the A-rated Travel-Hotels/Resorts industry.
Beyond what I have stated above, we have also given BVH grades for Value, Quality, and Momentum. Get access to all BVH ratings here.
Bottom Line
BVH’s revenue has grown at a 14.8% CAGR over the past three years. Also, the company’s EBITDA and normalized net income have increased at 25.7% and 54% CAGRs over the same time frame. Furthermore, the company is poised for solid growth in fiscal 2023 and beyond, driven by pent-up travel demand and a diversified portfolio due to strategic partnerships and acquisitions.
Given BVH’s financial strength, promising growth prospects, attractive profitability, and low valuation, we think investing in this top travel stock could be wise now.
How Does Bluegreen Vacations Holding Corp. (BVH) Stack up Against Its Peers?
BVH has an overall POWR Rating of B. One could also check out these other stocks within the Travel-Hotels/Resorts industry with an A (Strong Buy) or a B (Buy) rating: Genting Berhad (GEBHY), InterContinental Hotels Group (IHG), and Playa Hotels & Resorts (PLYA).
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BVH shares were unchanged in premarket trading Monday. Year-to-date, BVH has gained 6.37%, versus a 8.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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