Last Update 20 Dec 25

Fair value Increased 0.78%

TNL: Vacation Ownership And New Brands Will Shape A Balanced Earnings Outlook

Analysts have nudged their fair value estimate for Travel + Leisure slightly higher to approximately $74.92. This reflects a tighter discount rate, steady mid single digit revenue growth expectations, and improving conviction in the company’s vacation ownership momentum and new brand driven earnings power.

Analyst Commentary

Recent Street research has turned incrementally more constructive on Travel + Leisure, with multiple price target increases clustered around the low to mid $70s and one more aggressive move toward the mid $80s. The revisions are being driven by better than expected quarterly execution, particularly in vacation ownership, and growing confidence in the earnings contribution from newer brands.

Bullish and cautious views are both emerging as the stock rerates from prior levels, with valuation now more tightly linked to the company’s ability to sustain operational outperformance and monetize its expanded addressable market.

Bullish Takeaways

Bullish analysts highlight consistent quarterly beats and raised guidance as evidence that management is executing well against growth plans, supporting higher price targets and a premium relative to prior multiples.
Vacation ownership momentum, including stronger tour volume and improved sales efficiency, is seen as a durable driver of revenue and EBITDA growth, underpinning confidence in mid single digit top line expansion.
New brands and partnerships are viewed as meaningfully expanding the addressable market and adding incremental, higher margin fee and membership streams, which can lift the long term earnings power above prior expectations.
Signs of stabilization in the travel and membership segment, alongside an improving core timeshare business, are seen as de risking the earnings profile and justifying more constructive valuation frameworks.

Bearish Takeaways

Bearish analysts remain cautious on the pace and sustainability of growth, preferring Neutral stances where valuation already reflects much of the recent operational outperformance.
The stock’s narrative shift toward new brands and partnerships is seen by some as still not fully proven, with execution risk around integrating and scaling these concepts into meaningful, recurring earnings.
While recent results were strong, more cautious views emphasize that any slowdown in tour volume, sales efficiency, or membership transactions could quickly pressure EPS and compress valuation multiples.
There is lingering concern that macro uncertainty could still affect discretionary travel and timeshare demand, limiting upside to current targets if the broader environment turns less supportive.

What's in the News

Raised full year 2025 guidance for Gross VOI sales to a range of $2.45 billion to $2.50 billion, up from a prior outlook of $2.4 billion to $2.5 billion, signaling stronger than previously expected vacation ownership demand (Key Developments).
Repurchased 1,168,760 shares, or approximately 1.8% of shares outstanding, for $70.01 million between July 1 and September 30, 2025, completing a long running buyback totaling 133,583,548 shares for $6,798.25 million under the program initiated in 2010 (Key Developments).

Valuation Changes

Fair Value Estimate has risen slightly from approximately $74.33 to $74.92, reflecting modestly higher intrinsic valuation assumptions.
Discount Rate has fallen slightly from about 11.79% to 11.75%, supporting a marginally higher present value of future cash flows.
Revenue Growth has remained effectively unchanged at roughly 3.60%, indicating stable expectations for top line expansion.
Net Profit Margin is essentially flat at around 10.86%, signaling no material change in long term profitability assumptions.
Future P/E has inched higher from about 12.36x to 12.44x, implying a modestly richer multiple on forward earnings.

Expansion into new brands and markets, along with tech investments, is broadening the customer base and improving operational efficiency and margins.
Growing Millennial and Gen Z demand, combined with recurring revenue streams and an asset-light model, supports sustained membership and earnings stability.
Heavy reliance on US vacation ownership exposes the company to structural industry challenges, competitive threats, and demographic risks, limiting growth and increasing earnings vulnerability.

Catalysts

About Travel + Leisure

Provides hospitality services and travel products in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The expansion into new brands (Accor, Sports Illustrated Resorts, Margaritaville) and international markets, particularly with support from leading global hospitality partners, is expected to broaden Travel + Leisure's customer base and diversify revenue streams, positioning the company for sustained long-term top-line growth.
The company is benefiting from increased demand among Millennials and Gen Z, who prioritize experiences and travel, demonstrated by 65% of new buyers coming from these demographics, supporting long-term membership growth and driving repeat business, which should help maintain or increase revenue visibility.
Strategic investments in technology-including enhanced mobile apps and AI-driven personalization-are improving booking efficiency, owner engagement, and direct booking rates, which is likely to support higher net margins through operational leverage and reduced dependency on third-party platforms.
The continuation of an asset-light development strategy, coupled with disciplined underwriting and robust inventory recovery processes, is improving capital efficiency and supporting steady or expanding EBITDA margins by containing costs and enhancing the quality of the owned loan portfolio.
The strong and growing pipeline of predictable, recurring revenue from owner upgrades, management fees, and financing activity (with 75% of revenue recurring), along with a $20 billion ten-year revenue pipeline, underpins dependable free cash flow generation and earnings stability for future periods.

Travel + Leisure Earnings and Revenue Growth

Travel + Leisure Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Travel + Leisure's revenue will grow by 3.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.1% today to 11.5% in 3 years time.
Analysts expect earnings to reach $506.9 million (and earnings per share of $8.77) by about September 2028, up from $396.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.4x on those 2028 earnings, up from 10.2x today. This future PE is lower than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 4.88% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Travel + Leisure Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The Travel and Membership segment is facing persistent structural headwinds due to industry consolidation and changing business practices by larger clubs; recent affiliate M&A activity caused an unanticipated disruption and significant revenue/EBITDA decline (-6% and -11% YoY, respectively), which could continue to drag on overall company revenue and earnings if not addressed or successfully repositioned.
Growth remains highly concentrated in the core Vacation Ownership segment, with over 75% of revenue tied to this business line-overdependence could create earnings vulnerability if consumer tastes evolve or market downturns impact timeshare or vacation club demand, especially as competing models (e.g., short-term rental platforms) grow.
The company's international expansion strategy, while offering upside, is limited by the fact that timeshare remains overwhelmingly a US-centric product (over 90% of current revenue from the US); this constrains future top-line growth and exposes them to demographic risks in the US, such as an aging population reducing the long-term growth runway of their primary customer base.
Despite strong near-term consumer credit quality, the business remains sensitive to economic cycles and interest rate fluctuations-delinquency provisions have only recently stabilized and the company maintains a leverage ratio above 3x (expecting to trend up seasonally), which could pressure net margins and cash flow if macroeconomic conditions worsen.
Heightened competition and evolving consumer expectations, particularly from digital-first travel platforms and alternative accommodation providers, threaten to disrupt the traditional vacation ownership model, potentially eroding Travel + Leisure's market share, pricing power, and ability to sustain current revenue and net margin levels over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $67.455 for Travel + Leisure based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $73.0, and the most bearish reporting a price target of just $54.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.4 billion, earnings will come to $506.9 million, and it would be trading on a PE ratio of 10.4x, assuming you use a discount rate of 12.3%.
Given the current share price of $62.22, the analyst price target of $67.45 is 7.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Momentum In Core Segments And New Brands Will Drive Broader Expansion