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Why Is Marriott (MAR) Up 2.4% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Marriott International (MAR - Free Report) . Shares have added about 2.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Marriott reported better-than-expected first-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate.
Earnings and Revenue Discussion
Adjusted earnings per share (EPS) of $1.01 per share beat the Zacks Consensus Estimate of $0.90 by 12.2%. Moreover, the figure witnessed a 38.4% increase from combined adjusted EPS of $0.73 in the year-ago quarter. Also, earnings came above management’s guided range of $0.87 to $0.91.
Combined first-quarter 2016 results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business, completed on Jan 1, 2015 and some other adjustments.
Total revenue almost remained flat year over year at $5.56 billion, but topped the Zacks Consensus Estimate of $4.91 billion by 13.3%.
Excluding the impact of Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business on first-quarter 2016 results, revenues this quarter have increased a significant 47.4% year over year. This reflects the positive impact of Starwood acquisition on first-quarter 2017 revenues.
RevPAR & Margins
In the first quarter, revenue per available room (RevPAR) for worldwide comparable system-wide properties increased 3.1% in constant dollar (up 2.7% in actual dollars), driven by a 1.7% growth in occupancy and 0.6% rise in the average daily rate (ADR). The figure also came in above management’s guided range of an increase of 1–3% on a constant dollar basis.
Comparable system-wide RevPAR in North America grew 3.1% in constant dollars (up 3.2% in actual dollars). Both occupancy rate and ADR witnessed a rise of 1-1.7%, respectively. Also, the figure came above management’s guided range of a rise of 1–3% on a constant dollar basis.
In constant dollar, international comparable system-wide RevPAR rose 3.2% (up 1.4% in actual dollars) in the first quarter of 2017. Though occupancy rate increased 3.4%, ADR witnessed a decline of 2%. Management had expected the same to inch up in the 1–2% band for the quarter.
Notably, RevPAR surpassed the company’s expectations in North America and Europe, given stronger group attendance and higher-rated business transient demand. In fact, demand in Greater China and elsewhere in the Asia Pacific region was also better than anticipated.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $750 million, up 10% year over year.
Worldwide comparable company-operated house profit-margin increased 100 basis points (bps) in the first quarter, attributable to improved productivity and food and beverage margins. Also, North American comparable company-operated house profit-margins increased 100 bps. While house profit-margins for comparable company-operated properties outside North America rose 90 bps.
Total adjusted expenses decreased 2% year over year to $4.98 billion mainly due to lower general, administrative and other costs.
General, administrative and other expenses were $210 million, down 14.6% from the year-ago quarter, primarily on the back of general administrative cost savings. Notably, the figure was also below management’s expected range of $225 million to $230 million.
Second-Quarter 2017 Outlook
Marriott's outlook for the second quarter and full-year 2017 is for the combined company and does not include merger-related costs.
For the second quarter, earnings per share are estimated between $0.99 and $1.03.
Marriott projects comparable system-wide RevPAR to be flat to up 2% in North America on a constant dollar basis. Meanwhile, RevPAR for worldwide comparable system-wide properties is projected to inch up in the range of 1- 3%. Outside North America, the company expects the same to increase in the 3- 5% band.
Notably, the company's RevPAR guidance for the second quarter reflects the unfavorable shift of Easter into the same period.
The company expects fee revenues between $820 million and $835 million. The operating income is projected in the range of $620-$640 million while general, administrative and other expenses are anticipated between $220 million to $225 million.
2017 View Lifted
For full-year 2017, Marriott now anticipates earnings in the band of $3.92 to $4.09 per share, up from the earlier guided range of $3.79--$3.97.
The company has also increased its full-year 2017 RevPAR expectations on the back of stronger-than-expected RevPAR performance in North America in the first quarter and improving demand trends in the Europe and Asia Pacific regions.
Marriott expects the comparable system-wide RevPAR to increase 1—3% in North America (earlier flat to up 2%), climb 2—4% outside North America (earlier 1--3% rise) and inch up 1—3% worldwide (earlier 0.5–2.5% increase), on a constant dollar basis.
Additionally, the company projects fee revenues between $3,225 million to $3,295 million (earlier $3,175--$3,245 million). The increase reflects better-than-expected fees in the first quarter as well as higher comparable system-wide RevPAR expectations on a constant dollar basis for the full year.
Operating income is anticipated in the range of $2,405 million to $2,495 million (earlier $2,335--$2,430 million), while adjusted EBITDA is projected to be between $3,100 million and $3,195 million (earlier $3,075--$3,175 million). Also, general, administrative and other expenses are expected to be in the band of $880 million to $890 million (earlier $895–$905 million), given lower-than-expected expenses in the first quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
At this time, Marriott's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Marriott (MAR) Up 2.4% Since the Last Earnings Report?
It has been about a month since the last earnings report for Marriott International (MAR - Free Report) . Shares have added about 2.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Marriott Tops Q1 Earnings, Revenue Estimates; Lifts ’17 View
Marriott reported better-than-expected first-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate.
Earnings and Revenue Discussion
Adjusted earnings per share (EPS) of $1.01 per share beat the Zacks Consensus Estimate of $0.90 by 12.2%. Moreover, the figure witnessed a 38.4% increase from combined adjusted EPS of $0.73 in the year-ago quarter. Also, earnings came above management’s guided range of $0.87 to $0.91.
Combined first-quarter 2016 results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business, completed on Jan 1, 2015 and some other adjustments.
Total revenue almost remained flat year over year at $5.56 billion, but topped the Zacks Consensus Estimate of $4.91 billion by 13.3%.
Excluding the impact of Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business on first-quarter 2016 results, revenues this quarter have increased a significant 47.4% year over year. This reflects the positive impact of Starwood acquisition on first-quarter 2017 revenues.
RevPAR & Margins
In the first quarter, revenue per available room (RevPAR) for worldwide comparable system-wide properties increased 3.1% in constant dollar (up 2.7% in actual dollars), driven by a 1.7% growth in occupancy and 0.6% rise in the average daily rate (ADR). The figure also came in above management’s guided range of an increase of 1–3% on a constant dollar basis.
Comparable system-wide RevPAR in North America grew 3.1% in constant dollars (up 3.2% in actual dollars). Both occupancy rate and ADR witnessed a rise of 1-1.7%, respectively. Also, the figure came above management’s guided range of a rise of 1–3% on a constant dollar basis.
In constant dollar, international comparable system-wide RevPAR rose 3.2% (up 1.4% in actual dollars) in the first quarter of 2017. Though occupancy rate increased 3.4%, ADR witnessed a decline of 2%. Management had expected the same to inch up in the 1–2% band for the quarter.
Notably, RevPAR surpassed the company’s expectations in North America and Europe, given stronger group attendance and higher-rated business transient demand. In fact, demand in Greater China and elsewhere in the Asia Pacific region was also better than anticipated.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $750 million, up 10% year over year.
Worldwide comparable company-operated house profit-margin increased 100 basis points (bps) in the first quarter, attributable to improved productivity and food and beverage margins. Also, North American comparable company-operated house profit-margins increased 100 bps. While house profit-margins for comparable company-operated properties outside North America rose 90 bps.
Total adjusted expenses decreased 2% year over year to $4.98 billion mainly due to lower general, administrative and other costs.
General, administrative and other expenses were $210 million, down 14.6% from the year-ago quarter, primarily on the back of general administrative cost savings. Notably, the figure was also below management’s expected range of $225 million to $230 million.
Second-Quarter 2017 Outlook
Marriott's outlook for the second quarter and full-year 2017 is for the combined company and does not include merger-related costs.
For the second quarter, earnings per share are estimated between $0.99 and $1.03.
Marriott projects comparable system-wide RevPAR to be flat to up 2% in North America on a constant dollar basis. Meanwhile, RevPAR for worldwide comparable system-wide properties is projected to inch up in the range of 1- 3%. Outside North America, the company expects the same to increase in the 3- 5% band.
Notably, the company's RevPAR guidance for the second quarter reflects the unfavorable shift of Easter into the same period.
The company expects fee revenues between $820 million and $835 million. The operating income is projected in the range of $620-$640 million while general, administrative and other expenses are anticipated between $220 million to $225 million.
2017 View Lifted
For full-year 2017, Marriott now anticipates earnings in the band of $3.92 to $4.09 per share, up from the earlier guided range of $3.79--$3.97.
The company has also increased its full-year 2017 RevPAR expectations on the back of stronger-than-expected RevPAR performance in North America in the first quarter and improving demand trends in the Europe and Asia Pacific regions.
Marriott expects the comparable system-wide RevPAR to increase 1—3% in North America (earlier flat to up 2%), climb 2—4% outside North America (earlier 1--3% rise) and inch up 1—3% worldwide (earlier 0.5–2.5% increase), on a constant dollar basis.
Additionally, the company projects fee revenues between $3,225 million to $3,295 million (earlier $3,175--$3,245 million). The increase reflects better-than-expected fees in the first quarter as well as higher comparable system-wide RevPAR expectations on a constant dollar basis for the full year.
Operating income is anticipated in the range of $2,405 million to $2,495 million (earlier $2,335--$2,430 million), while adjusted EBITDA is projected to be between $3,100 million and $3,195 million (earlier $3,075--$3,175 million). Also, general, administrative and other expenses are expected to be in the band of $880 million to $890 million (earlier $895–$905 million), given lower-than-expected expenses in the first quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Marriott International Price and Consensus
Marriott International Price and Consensus | Marriott International Quote
VGM Scores
At this time, Marriott's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.