Back to top

Image: Bigstock

What's in Store for Marriott Vacations (VAC) in Q4 Earnings?

Read MoreHide Full Article

Marriott Vacations Worldwide Corp. (VAC - Free Report) is scheduled to report fourth-quarter 2017 numbers on Feb 27, before the opening bell.

Last quarter, this vacation ownership company delivered a positive earnings surprise of 23.7%. Moreover, the trailing four-quarter average earnings surprise is 14.5%.

Let’s discuss how the company’s top and bottom line will shape up in the fourth-quarter 2017.

Hurricane Impact to Continue

In spite of continuous momentum in marketing platforms and sales distributions, the adverse impact of the hurricanes that took place in the third quarter is expected to mar Marriott Vacations’ fourth-quarter revenues. The Zacks Consensus Estimate for revenues is pegged at $497 million, implying 11.9% decline. In fact, the company anticipates a negative impact of $20 million on full-year contract sales due to the hurricanes.

Increased Expenses to Dent Profit

The company’s increased marketing expenses might pressurize margins as it is extensively marketing-oriented and relies heavily on sales initiatives to attract customers. Additionally, management expects that the utilization of rental availability for preview room nights to increase tours can dent rental margins in the to-be-reported quarter.

Notably, for the fourth quarter, the company expects adjusted EBITDA in the range of $64 million and $69 million. This compares unfavorably with the prior-year quarter, due to the change in the company’s reporting calendar. Since the first three quarters of 2017 benefited from an additional 22 days of operating results, the offset was noticed in the fourth quarter with 20 days less of operating results compared to 2016.

These might have an adverse impact on the company’s profits. The Zacks Consensus Estimate for earnings is pegged at $1.16, implying 36.6% decrease.

Our Quantitative Model Suggests a Miss

Considering the headwinds, our quantitative model predicts that Marriott Vacations does not have the right combination of two main ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
 
Zacks ESP: Marriott Vacations has an Earnings ESP of -1.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Marriott Vacations carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat.You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Marriot Vacations Worldwide Corporation Price and EPS Surprise

Stocks to Consider

Here are a few stocks from the Consumer Discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Carnival Corporation (CCL - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank #3. The company is expected to report quarterly numbers on Mar 27.

Discovery Communications, Inc. has an Earnings ESP of +9.20% and a Zacks Rank #3. The company is expected to report quarterly results on Feb 27.

Red Rock Resorts, Inc. (RRR - Free Report) has an Earnings ESP of +9.38% and a Zacks Rank #3. The company is expected to report quarterly numbers on Mar 6.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in