Choice Hotels International Inc (CHH)

Pretax margin

		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
Earnings before tax but after interest (EBT) (ttm)	US$ in thousands	336,956	371,440	386,987	416,566	436,806	450,976	465,789	435,517	376,492	293,544	166,049	51,317	53,006	104,987	166,817	263,849	269,929	256,887	273,406	279,276
Revenue (ttm)	US$ in thousands	1,544,165	1,547,751	1,536,460	1,477,014	1,401,949	1,324,605	1,233,708	1,144,078	1,069,298	978,053	865,455	738,844	774,072	848,763	948,724	1,114,675	1,114,820	1,091,715	1,072,473	1,050,230
Pretax margin		21.82%	24.00%	25.19%	28.20%	31.16%	34.05%	37.76%	38.07%	35.21%	30.01%	19.19%	6.95%	6.85%	12.37%	17.58%	23.67%	24.21%	23.53%	25.49%	26.59%

December 31, 2023 calculation

Pretax margin = EBT (ttm) ÷ Revenue (ttm)
= $336,956K ÷ $1,544,165K
= 21.82%

Choice Hotels International Inc's pretax margin has fluctuated over the past few years. The pretax margin has shown a general declining trend from 2019 to 2021, with a significant drop from 2019 to 2020. However, the company experienced a notable recovery in pretax margin from 2021 to 2022, with a steady increase in subsequent quarters up to March 2023.

The pretax margin reached its lowest point in the first quarter of 2020 at 6.85% before staging a recovery. From there, the pretax margin steadily improved, showing a positive trend. This indicates that the company managed to enhance its profitability before taxes over time.

The most recent pretax margin of 21.82% as of December 31, 2023, is lower compared to the peak pretax margin of 38.07% in March 2022. This suggests a slight decrease in profitability relative to the recent past, which may be an area warranting further analysis to understand the factors contributing to this change. However, the current pretax margin remains at a reasonable level, indicating that the company is generating a healthy level of profit before taxes compared to its total revenue.