Bluegreen Vacations Holding Corporation (BVH) functions as a vacation ownership company. It markets and sells vacation ownership interests (VOI) and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others.
The stock has gained 46.5% over the past year to close its last trading session at $24.89. The company delivered record sales for the first quarter of 2022, driven by a 40% increase in guest tours and a 1% increase in sales volume per guest. This reflects a 17% increase in average sales price per transaction.
Alan B. Levan, Chairman and CEO of BVH, said, "Our sales are driven by the success of our marketing programs, and Bluegreen’s marketing to new customers generally begins with the sale of a vacation package to a prospect.”
He also said, “Overall, the demand for vacations by Bluegreen Vacation Club owners has been strong, and we believe our core strategy of primarily offering a ‘drive-to’ network of resorts will continue to serve as a growth driver."
Here is what could shape BVH’s performance in the near term:
Industry Outlook
The surge in demand for travel with the easing of COVID-19 restrictions has helped the travel industry withstand the rising inflation and decreased consumer spending. According to a report by U.S. Travel Association, domestic leisure travel spending has exceeded pre-pandemic levels, while business travel is gaining traction and is expected to reach 81% of pre-pandemic levels this year.
Robust Financials
BVH's total revenue increased 33.3% year-over-year to $195.13 million for the first quarter ending March 31, 2022. Its net income grew 437.6% from the year-ago value to $15.99 million, while its adjusted EBITDA came in at $31.06 million, representing a 144.1% increase year-over-year. The company's EPS rose 406.7% from the year-ago value to $0.76.
Strong Profitability
BVH’s trailing-12-month net income margin of 8.83% is 34.3% higher than the industry average of 6.58%. In addition, its trailing-12-month gross profit margin of 88.84% is 138.9% higher than the 37.18% industry average. Also, its trailing-12-month ROE, ROC, and ROA are 85.1%, 95.9%, and 1.02% higher than the respective industry averages.
Discounted Valuations
The company’s 7.38X forward P/E is 37.7% lower than its industry average of 11.86x. Also, its 1.32x EV/Sales is 19% lower than its industry average of 1.11x. Its 0.62x forward Price/Sales is 30.7% lower than its industry average of 0.89x.
Impressive Growth Prospects
Street expects BVH’s revenues to rise 11.2% in the current year and 3.3% next year. The company’s EPS is expected to rise 34.8% in the current year and 11.7% next year. In addition, its EPS is expected to rise at a 10% CAGR over the next five years.
Furthermore, the company has an impressive earnings surprise history; it topped Street’s EPS estimates in three of the trailing four quarters.
Consensus Rating and Price Target Indicate Potential Upside
The only Wall Street analyst that rated BVH rated it Buy. The 12-month median price target of $57.00 indicates a 129% potential upside.
POWR Ratings Reflect Solid Prospects
BVH has an overall A grade, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 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 is rated an A grade for Value, Quality, and Sentiment.
BVH’s lower valuation is in sync with its Value grade. Its higher profitability is consistent with its Quality grade. In addition, the expected revenue and earnings growth and the stock’s potential upside based on the average price target justify the Sentiment grade.
Among the 22 stocks in the B-rated Travel - Hotels/Resorts industry, BVH is ranked #1.
Beyond what I stated above, we have graded BVH for Growth, Stability, and Momentum. Click here to see the additional POWR Ratings for BVH.
Bottom Line
BVH’s robust financial performance and strong profitability should help the stock soar. Therefore, it could be wise to scoop up the shares at the current discounted valuation.
How does Bluegreen Vacations Holding Corporation (BVH) Stack Up Against its Peers?
BVH has an overall POWR Rating of A, which equates to a Strong Buy. This rating is superior to its peers within the Travel - Hotels/Resorts industry, such as Marriott Vacations Worldwide Corporation (VAC), Wyndham Hotels & Resorts, Inc. (WH), and Vail Resorts, Inc. (MTN), which all are rated C (Neutral).
BVH shares were trading at $26.28 per share on Wednesday afternoon, up $1.39 (+5.58%). Year-to-date, BVH has declined -24.71%, versus a -14.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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