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Why Is Marriot Vacations Worldwide Corporation (VAC) Down 3.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marriot Vacations Worldwide Corporation (VAC - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marriot Vacations Worldwide Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marriott Vacations reported better-than-expected results for the fourth quarter of 2018. Adjusted earnings of $1.49 surpassed the Zacks Consensus Estimate of $1.45 by 2.6%. Earnings, however, declined 24% year over year due to increased expenses.
Quarterly revenues of $1,052 million outpaced the consensus estimate of $1,043 million by 0.9%. Revenues also increased 87.2% from the year-ago quarter, backed by revenue growth across segments.
The company is currently in the process of integrating and transforming the business, which is likely to drive additional growth opportunities.
Segmental Performances
Marriott Vacations’ business is operated under two major segments — Vacation Ownership (94.6% of total revenues in 2018) and Exchange & Third-Party Management (5.4%).
Vacation Ownership
Consolidated Vacation Ownership contract sales were $358 million, reflecting a 73% year-over-year increase. Legacy-MVW contract sales were $224 million, up 8% year over year while Legacy-MVW North America VPG remained flat year over year at $3,496 million.
Rental revenues in the fourth quarter were $117 million, up 33% from the fourth quarter of 2017. Rental revenues, net of expenses, were $31 million, marking a $25-million increase from the fourth quarter of 2017.
Financing revenues increased 79% in the fourth quarter to $63 million. Financing revenues, net of expenses and consumer financing interest expense were $39 million, marking a 66% increase from the fourth quarter of 2017.
Revenues for resort management and other services increased 72% year over year in the quarter under review and came in at $120 million. Less of expenses, resort management revenues increased 54% to $53 million.
Exchange & Third-Party Management
Management and exchange revenues totaled $81 million in the fourth quarter. Management and exchange revenues, net of marketing and sales and related expenses, totaled $48 million. Rental revenues totaled $14 million. Rental revenues net of expenses were $7 million.
Expenses & Margins
Total expenses in the fourth quarter amounted to $939 million, up 90.5% year over year. The surge in expenses was mainly caused by an increase in the cost of vacation ownership products as well as high rental, financing and administrative costs. Increased marketing and sales expenses along with management and exchange costs also affected total costs. The company’s adjusted EBITDA in the fourth quarter of 2018 was $180 million, marking a whopping 117% increase from the year-ago quarter.
Balance Sheet
Cash and cash equivalents, as of Dec 31, 2018, was $231 million compared with $409 million as of 2017 end. Inventory increased to $863 million by the end of 2018 from $398 million by 2017 end.
2019 Outlook
For 2019, the company expects adjusted EPS of $7.23-$7.83. The Zacks Consensus Estimate for earnings in 2019 is pegged at $7.78, higher than the mid-point of the company’s guided range.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
Currently, Marriot Vacations Worldwide Corporation has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Marriot Vacations Worldwide Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Marriot Vacations Worldwide Corporation (VAC) Down 3.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Marriot Vacations Worldwide Corporation (VAC - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marriot Vacations Worldwide Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marriott Vacations Q4 Earnings & Revenues Beat Estimates
Marriott Vacations reported better-than-expected results for the fourth quarter of 2018. Adjusted earnings of $1.49 surpassed the Zacks Consensus Estimate of $1.45 by 2.6%. Earnings, however, declined 24% year over year due to increased expenses.
Quarterly revenues of $1,052 million outpaced the consensus estimate of $1,043 million by 0.9%. Revenues also increased 87.2% from the year-ago quarter, backed by revenue growth across segments.
The company is currently in the process of integrating and transforming the business, which is likely to drive additional growth opportunities.
Segmental Performances
Marriott Vacations’ business is operated under two major segments — Vacation Ownership (94.6% of total revenues in 2018) and Exchange & Third-Party Management (5.4%).
Vacation Ownership
Consolidated Vacation Ownership contract sales were $358 million, reflecting a 73% year-over-year increase. Legacy-MVW contract sales were $224 million, up 8% year over year while Legacy-MVW North America VPG remained flat year over year at $3,496 million.
Rental revenues in the fourth quarter were $117 million, up 33% from the fourth quarter of 2017. Rental revenues, net of expenses, were $31 million, marking a $25-million increase from the fourth quarter of 2017.
Financing revenues increased 79% in the fourth quarter to $63 million. Financing revenues, net of expenses and consumer financing interest expense were $39 million, marking a 66% increase from the fourth quarter of 2017.
Revenues for resort management and other services increased 72% year over year in the quarter under review and came in at $120 million. Less of expenses, resort management revenues increased 54% to $53 million.
Exchange & Third-Party Management
Management and exchange revenues totaled $81 million in the fourth quarter. Management and exchange revenues, net of marketing and sales and related expenses, totaled $48 million. Rental revenues totaled $14 million. Rental revenues net of expenses were $7 million.
Expenses & Margins
Total expenses in the fourth quarter amounted to $939 million, up 90.5% year over year. The surge in expenses was mainly caused by an increase in the cost of vacation ownership products as well as high rental, financing and administrative costs. Increased marketing and sales expenses along with management and exchange costs also affected total costs. The company’s adjusted EBITDA in the fourth quarter of 2018 was $180 million, marking a whopping 117% increase from the year-ago quarter.
Balance Sheet
Cash and cash equivalents, as of Dec 31, 2018, was $231 million compared with $409 million as of 2017 end. Inventory increased to $863 million by the end of 2018 from $398 million by 2017 end.
2019 Outlook
For 2019, the company expects adjusted EPS of $7.23-$7.83. The Zacks Consensus Estimate for earnings in 2019 is pegged at $7.78, higher than the mid-point of the company’s guided range.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
Currently, Marriot Vacations Worldwide Corporation has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Marriot Vacations Worldwide Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.