Travel & Leisure Co. (TNL): what the price assumes

In the published model solve dated 2026-Q2, anchored at $77.90, Travel & Leisure Co. (TNL) is priced for +1.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/TNL

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.3pp.

Reconcile: at the x-ray's 9.3% required return this reads ~13.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.7%); the inversion above states its own rate.

Per-Model Detail (n=2)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Travel + Leisure is a timeshare and travel-club operator that converts vacation contracts into $442M of trailing free cash flow, nearly double reported net income, and returned $467M to shareholders over the past year on a $4.78B market value.
• The defining risk is the capital structure meeting the consumer: interest costs absorb a large bite of operating income (coverage of roughly 2.4 times), while the FY2025 10-K acknowledges "delinquencies remaining elevated over historical levels" in the loan portfolio that finances its own customers' purchases.
• Watch second-quarter results against management's $260 million to $270 million adjusted EBITDA guide and the delinquency trend in the consumer-finance book.

Bull Case

The counterintuitive fact sits right on the cash flow statement: a company whose book equity is negative and whose balance sheet carries debt at more than five times its equity base generated positive free cash flow in all four trailing quarters, $442M in total, converting 187% of net income into cash. That is not an accounting trick; it is the timeshare model working as designed. Owners prepay for decades of vacations, then pay recurring management fees and financing interest on top, and the FY2025 10-K describes the strategy as broadening "the strength of our cornerstone timeshare business through a multi-brand expansion strategy, and our exchange businesses by creating depth of leisure travel products and services through growth of our travel clubs" (accession 0001361658-26-000009). The negative equity is the residue of years of buybacks, not accumulated losses.

The operating momentum is real and accelerating into 2026. First-quarter net revenues reached $961 million with net income of $79 million, adjusted EBITDA up 11% to $225 million, and adjusted diluted EPS up 31% to $1.45; gross vacation ownership interest sales rose 7% to $549 million and the vacation ownership segment's EBITDA jumped 20% to $191 million. The brand engine is widening the customer funnel: newer brands are approaching 10% of VOI sales, with Margaritaville near $150 million and the Accor and Eddie Bauer lines gaining traction. Domestically the base is compounding too, with the United States, 78% of revenue, growing 28.2% over roughly three years.

Management behaves like the cash is durable. Over the trailing year the company paid $149.0M of dividends, an annualized $2.40 per common share yielding 3.2%, and repurchased $318.0M of stock, 134.7% of net income, while reporting leverage just under 3.2x on its own net-leverage basis at quarter-end. Reaffirmed full-year guidance of $2.5 to $2.6 billion in gross VOI sales and $1.03 to $1.055 billion of adjusted EBITDA gives the return program a funded runway. At a 9.3% free cash flow yield, the market is pricing this cash machine like it might break; the bull case is simply that it keeps running.

Bear Case

Timeshare is a leveraged bet on the bottom half of the consumer cycle, and this point in the cycle is where the cracks show first. The business sells a discretionary product, then lends its own customers the money to buy it; both legs sag together in a downturn. The company's 10-K concedes the first leg is already under strain: "we are experiencing some pressure on our loan portfolio primarily due to delinquencies remaining elevated over historical levels" (accession 0001361658-26-000009). The allowance for loan losses is prominent enough in the financials that the auditor flagged it as a critical audit matter. When a company's growth engine requires underwriting its own demand, elevated delinquency is not a footnote; it is the demand signal.

The capital structure amplifies whatever the consumer does. Operating income covers interest only about 2.4 times, debt stands at 5.6 times a shrinking equity base that has gone negative, and the funding model leans on securitizing customer receivables, pools the 10-K notes were all "in compliance with applicable contractual triggers" as of December 31, 2025, a sentence that exists because non-compliance would divert cash from the parent. In a travel recession, VOI sales fall, defaults rise, securitization economics tighten, and the fixed interest bill stays. The equity, as the thin slice atop that stack, moves violently in both directions.

Competition for the next owner is not getting cheaper either. The filing describes fighting for "new owner tours from different marketing channels" against overlapping loyalty programs, and the branded rivals it competes with, Marriott Vacations at $4.8 billion of vacation ownership segment revenue and Hilton Grand Vacations, per their own 10-Ks, carry hotel-system flags that feed them tour flow. Meanwhile the price is not obviously cheap for the risk: 20.2x trailing earnings sits above the 18x sector median and 15.1x EV/EBITDA above the 12x median, and peer-multiple methods read the price at about 1.6x what they would defend. A consumer-credit-sensitive, negative-equity borrower trading at a premium to its sector is a bet that the cycle stays kind.

Valuation

Two honest readings of this price disagree, and the disagreement is the analysis. Read on operating income, the price is undemanding: at $74.17 (July 11, 2026) the market pays about 14 times company-wide operating income, low enough to sit below what even a 5%-per-year operating-profit decline path would warrant, and the long-run margin the price requires, about 10.6%, is below the roughly 13.7% the business earns today. Read on the equity methods, the price looks rich: peer multiples put it around 1.6x their central estimate, with the trailing P/E at 20.2x against an 18x sector median and EV/EBITDA at 15.1x against 12x, and the cash-flow-to-equity frames sit far below the price. The bridge between the readings is the debt: on an enterprise basis the operating business is cheap relative to its income, but interest coverage of roughly 2.4 times means a large share of that income is spoken for before equity holders see it, so equity-anchored methods discount it heavily. A note on measurement: trailing operating income reads about $735 million on the fuller-year record basis and about $556 million on the most recent EDGAR quarterly TTM basis; the multiple above uses the former, and the gap between the two bases is itself a signal of how much quarter-to-quarter swing this P&L carries.

What the price concretely needs is continuation, not acceleration. Management's reaffirmed 2026 guidance, $2.5 to $2.6 billion of gross VOI sales and $1.03 to $1.055 billion of adjusted EBITDA, funds the current capital-return pace of $467M a year if delivered. The revenue mix documented in the filing, VOI sales plus recurring property-management fees, consumer-financing interest, and travel-club subscriptions (FY2025 10-K, accession 0001361658-26-000009), is what gives the cash flow its resilience, with $442M of trailing free cash flow off $4.05B of revenue.

The downside is not padded. Book equity is negative, leverage is the defining balance-sheet fact, and the solvency question runs through consumer credit performance rather than corporate liquidity. For a buyer, the calculus is a 9.3% free cash flow yield and a 3.2% growing dividend against an equity that sits last in line behind a 2.4x-covered interest bill. The multiple on operating income says the market has already priced in some deterioration; the equity stack determines how forgiving that discount actually is.

Catalysts

The next print is the second quarter, guided to adjusted EBITDA of $260 million to $270 million, against a first quarter that beat expectations with $225 million, up 11% year over year. The two numbers to pull from it are gross VOI sales, which grew 7% to $549 million in Q1 and need to track the reaffirmed $2.5 to $2.6 billion full-year range, and volume per guest alongside the delinquency trend in the financing book, since elevated delinquency is the one pressure the company itself has flagged in its FY2025 annual filing.

The brand expansion carries the medium-term story. Newer brands were approaching 10% of VOI sales as of the first quarter, with Margaritaville near a $150 million run rate and the Accor Vacation Club and Eddie Bauer lines building. Each quarter of mix shift toward these brands widens the tour funnel beyond the legacy Wyndham system and tests whether the multi-brand strategy the 10-K describes converts marketing spend into owners at attractive cost.

Capital allocation is its own catalyst stream. The company returned $467M over the trailing year between $318M of buybacks and $149M of dividends, with quarter-end leverage just under 3.2x on management's net measure; sustaining that pace through 2026 depends on adjusted EBITDA landing within the $1.03 to $1.055 billion guided range and on securitization markets staying open on favorable terms. Any commentary on consumer health, close rates on tours, or provisioning for loan losses will move the stock more than the headline EPS number, because the credit book is where this cycle's question lives.

Peer Cohorts (Per Segment, With Filing Citations)

Vacation Ownership (reported)

• HGV (Hilton Grand Vacations Inc.)
• FY2025 10-K: …transaction price is presented as a reserve on the financing receivable. See Note 7: Timeshare Financing Receivables for additional information regarding our estimate of variable consideration. Vacation ownership product sales include revenue from the sale of VOIs, which in the case of the trust products, are…
• FY2025 10-K: …members in accordance with the applicable agreements. Purchasers of a trust VOI are offered the opportunity to become members of a Club through which they can exchange their points for a number of vacation options. In addition to an annual membership fee, members pay transaction fees depending upon the exchange or…
• VAC (MARRIOTT VACATIONS WORLDWIDE CORP)
• FY2025 10-K: …and Exchange & Third-Party Management. 2025 ($ in millions) Segment Revenue % of Segment Revenue Vacation Ownership $ 4,805 96% Exchange & Third-Party Management 213 4% Total Segment Revenue $ 5,018 100% The Vacation Ownership Industry The vacation ownership industry, also known as the timeshare industry, enables…
• FY2025 10-K: …of vacation ownership business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Business at properties in some locations may experience a greater impact from seasonality than those in other locations. Within our Exchange & Third-Party Management segment,…
• HLT (Hilton Worldwide Holdings Inc.)
• FY2025 10-K: …terms of the contract and revenue related to direct reimbursements in the period in which the cost is incurred. For discussion on revenue recognition for point redemptions, refer to "-Hilton Honors" below. Ownership revenues We identified the following performance obligations in connection with our ownership…
• FY2025 10-K: …of 0.4 percentage points and ADR of 0.2 percent. Licensing fees increased $104 million primarily as a result of an increase in fees from our strategic partnerships, predominantly resulting from activity under our co-branded credit card arrangements, and HGV. Increased fees from HGV were the result of increased…
• MAR (MARRIOTT INTERNATIONAL INC /MD/)
• FY2025 10-K: …and Other Properties We have franchise, license, and other arrangements that permit hotel owners and certain other third parties to use many of our lodging brand names and systems. Under our hotel franchising arrangements, we generally receive an initial application fee and continuing royalty fees, which typically…
• FY2025 10-K: …and Marriott Vacations Worldwide Corporation, and the other signatories thereto. Exhibit No. 10.2 to our Form 10-Q filed November 4, 2024 (File No. 001-13881). 10.3.1 License, Services and Development Agreement entered into on November 17, 2011, among The Ritz-Carlton Hotel Company, L.L.C., Marriott Vacations…
• WH (Wyndham Hotels & Resorts, Inc.)
• FY2025 10-K: …of former Parent incurred prior to the spin-off, including liabilities of former Parent related to, arising out of or resulting from certain terminated or divested businesses, certain general corporate matters of former Parent and any actions with respect to the separation plan or the distribution made or brought by…
• FY2025 10-K: …and the success of these third parties' business models. If we are unable to grow our ancillary revenues as a result of these or other factors, our results of operations, financial condition or cash flows could be adversely affected. 15 Table of Contents Risks Relating to Our Relationships with Third Parties Our…

Travel and Membership (reported)

• EXPE (EXPEDIA GROUP, INC.)
• FY2025 10-K: …Revenue We accrue the cost of certain merchant revenue based on the amount we expect to be billed by suppliers. In certain instances when a supplier invoices us for less than the cost we accrued, we generally reduce our merchant accounts payable and the supplier costs within net revenue six months in arrears, net of…
• FY2025 10-K: …through our various media and advertising offerings across several of our transaction-based websites, as well as on our majority-owned metasearch site, trivago. For the year ended December 31, 2025, we had total revenue of $14.7 billion, with merchant, agency and advertising, media and other accounting for 70%, 22%,…
• BKNG (Booking Holdings Inc.)
• FY2025 10-K: …benefit, (c) operate multiple brands that collaborate with each other, and (d) invest in profitable and sustainable growth. Deliver value and an excellent experience to our consumers and partners. We endeavor to provide consumers with: (a) personalized and easy-to-use online travel services; (b) a comprehensive…
• FY2025 10-K: …designated as a hedging instrument are recognized in "Other income (expense), net" in the Consolidated Statements of Operations. See Notes 12 and 14 for additional information related to the net investment hedge. Revenue Recognition Online travel reservation services Substantially all of the Company's revenues are…
• TRIP (TRIPADVISOR, INC.)
• FY2025 10-K: OperatingSegmentsMember trip:HotelsAndOtherMember 2023-01-01 2023-12-31 0001526520 us-gaap:OperatingSegmentsMember trip:HotelsAndOtherMember 2025-01-01 2025-12-31 0001526520 us-gaap:InternalRevenueServiceIRSMember 2024-01-01 2024-12-31 0001526520 2024-01-01 2024-12-31 0001526520…
• FY2025 10-K: …2025-01-01 2025-12-31 0001526520 us-gaap:OperatingSegmentsMember srt:HotelMember trip:HotelsAndOtherMember 2024-01-01 2024-12-31 0001526520 trip:LTRIPMember 2025-03-01 2025-03-31 0001526520 2026-02-06 0001526520 trip:ExperiencesMember 2024-12-31 0001526520 us-gaap:FairValueInputsLevel2Member…
• ABNB (Airbnb, Inc.)
• FY2025 10-K: …our customer acquisition costs and affecting our competitive position. We also face competition from search engines like Google, which can influence search traffic and promote their own travel services, potentially disintermediating our platform. To the extent that major technology companies favor their own travel…
• FY2025 10-K: …For experiences and services, we only earn a host fee. Substantially all of our revenue comes from stays booked on our platform. Incentives include our referral programs and marketing promotions to encourage the use of our platform and attract new customers. We experience a difference in timing between when a booking…
• GBTG (Global Business Travel Group, Inc.)
• FY2025 10-K: …on Form 8-K, filed with t he SEC on January 21, 2026). 10.7 Sponsor Side Letter, dated as of December 2, 2021, by and among Apollo Strategic Growth Capital, APSG Sponsor, L.P., certain directors and officers of Apollo Strategic Growth Capital and GBT JerseyCo Limited (incorporated by reference to Exhibit 10.6 of the…
• FY2025 10-K: 10.2 Form of PIPE Subscription Agreement, dated December 2, 2021, by and between Apollo Strategic Growth Capital and certain institutional and accredited investors (incorporated by reference to Exhibit 10.3 of the Company's Registration Statement on Form S-4 (Reg. No. 333- 261820), filed with the SEC on December 21,…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.