Choice Hotels International Inc (CHH)

Operating return on assets (Operating ROA)

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Operating income (ttm) US$ in thousands 375,028 414,119 424,095 457,055 478,601 508,569 522,657 484,332 428,933 338,425 230,019 118,884 121,668 174,006 225,726 320,374 318,642 302,048 310,796 317,275
Total assets US$ in thousands 2,394,800 2,232,240 2,150,320 2,106,220 2,102,180 2,188,980 2,076,840 1,972,030 1,931,820 1,865,930 1,728,790 1,584,140 1,587,330 1,570,150 1,686,040 1,703,950 1,386,670 1,374,260 1,214,280 1,173,820
Operating ROA 15.66% 18.55% 19.72% 21.70% 22.77% 23.23% 25.17% 24.56% 22.20% 18.14% 13.31% 7.50% 7.66% 11.08% 13.39% 18.80% 22.98% 21.98% 25.60% 27.03%

December 31, 2023 calculation

Operating ROA = Operating income (ttm) ÷ Total assets
= $375,028K ÷ $2,394,800K
= 15.66%

Choice Hotels International Inc's operating return on assets (operating ROA) has exhibited variations over the past five quarters. The trend shows a general increase in the operating ROA from 15.66% in December 2021 to a peak of 25.17% in June 2022, followed by a slight decline in the subsequent quarter. However, significant volatility is observed, with the operating ROA fluctuating between 7.50% and 25.17% over this time frame.

The average operating ROA for the period under consideration is approximately 18.75%, indicating the company generates $0.1875 in operating income for every dollar of assets employed. The highest operating ROA of 27.03% was recorded in the second quarter of 2019, while the lowest was seen in the first quarter of 2021 at 7.50%.

The upward trend in operating ROA from 15.66% in December 2021 to a peak of 25.17% in June 2022 suggests an improvement in the company's operational efficiency and effectiveness in generating profits relative to its asset base. However, the subsequent fluctuations indicate potential challenges or volatility in the business environment impacting profitability. A declining trend from June 2022 to March 2023 followed by an increase in the latest quarter (December 2023) could indicate a need for further analysis to understand the underlying drivers of performance.

Overall, the varying operating ROA indicates that management and investors should continue monitoring the company's operational efficiency and asset utilization to ensure sustained profitability and return on investment.