Chatham Lodging Trust (NYSE:CLDT), a real estate investment trust focused on upscale extended-stay and select-service hotels, reported financial results for the fourth quarter of 2025 that notably surpassed analyst expectations for profitability, even as a key revenue metric showed slight pressure. The market's initial reaction appears positive, with the stock trading higher in pre-market activity.
Earnings and Revenue Versus Estimates
The company's performance relative to Wall Street forecasts presents a mixed but ultimately favorable picture, particularly on the bottom line.
- Earnings Per Share (EPS): Chatham reported adjusted funds from operations (AFFO) per share of $0.21 for Q4 2025. This significantly exceeded the analyst consensus estimate of a loss of $0.12 per share. The result also represents a 5% increase from the $0.20 per share reported in the prior-year quarter.
- Revenue: Total revenue for the quarter was approximately $67.7 million. This came in slightly below the analyst estimate of $68.6 million. The company attributed the top-line softness to specific, transient headwinds including government shutdowns and renovation-related closures at convention centers in several of its key markets.
Market Reaction and Price Action
The positive earnings surprise appears to be the dominant factor driving early investor sentiment. The stock is indicating a strong pre-market gain of nearly 4%. This bullish move contrasts with the stock's performance over recent weeks, which had been relatively flat to slightly negative. The sharp upward move suggests the market is rewarding the company's ability to convert revenue into cash flow more efficiently than anticipated, as evidenced by the strong AFFO beat and resilient margins.
Key Operational Highlights from the Quarter
Beyond the headline numbers, the earnings release detailed several important operational and strategic developments:
- Portfolio Performance: Revenue per available room (RevPAR) across its comparable hotel portfolio declined 1.8% year-over-year to $131, driven by a slight dip in both average daily rate and occupancy. Management noted that government shutdowns and convention center disruptions negatively impacted quarterly RevPAR by approximately 300 basis points.
- Margin Resilience: Despite the decline in RevPAR, the company demonstrated strong cost control. Gross operating profit margins declined a modest 30 basis points to 40.2%, while Hotel EBITDA margins actually improved by 70 basis points to 33.2%.
- Capital Allocation Initiatives: Chatham was active on several corporate fronts:
- Share Repurchases: The company bought back approximately 1.0 million shares during the quarter at an average price of $6.73, part of its inaugural $25 million repurchase program.
- Asset Recycling: It closed the sale of a 26-year-old hotel for $17 million and highlighted the successful sale of four older properties in 2025 for a total of $71 million, using proceeds to reduce debt.
- Dividend: The quarterly common dividend was raised to $0.09 per share, up from $0.07 in the year-ago period.
- Balance Sheet Improvement: Net debt was reduced by $70 million year-over-year to $319 million, lowering the company's leverage ratio from 23% to 20%.
Forward Outlook and Analyst Comparisons
Looking ahead, Chatham provided detailed guidance for 2026, which offers a basis for comparison with existing analyst projections.
The company forecasts full-year 2026 AFFO per share in a range of $1.04 to $1.14. The midpoint of this guidance ($1.09) sits above the current analyst consensus estimate for a loss per share. For the first quarter of 2026, Chatham's commentary suggests a conservative near-term view, which aligns with the analyst expectation for a year-over-year revenue decline. The full-year sales guidance of $284 to $290 million is broadly in line with the current analyst sales estimate of approximately $299 million.
CEO Jeffrey Fisher described the 2026 outlook as "conservative" given recent industry volatility but expressed positivity about the long-term industry fundamentals, citing expected GDP growth and muted new hotel supply.
For a detailed breakdown of future earnings estimates and historical performance, you can review more data here.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. The analysis is based on publicly available data and should not be construed as a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
