Marriott International Inc. ( MAR - Analyst Report ) , a leading worldwide hospitality company, is slated to release its third-quarter 2012 results on Wednesday, October 3, after the market closes. The current Zacks Consensus Estimate for the third quarter stands at 40 cents per share.

Earnings Surprise

With respect to earnings surprises over the trailing four quarters, Marriott has outperformed the Zacks Consensus Estimate in two quarters, missed the same in one and posted in-line results in one. The earnings surprise ranges from negative 2.13% to positive 7.41%, with the average at 2.91%. This implies that the company has surpassed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Second Quarter Recap

Marriott reported second-quarter 2012 adjusted earnings of 42 cents, in line with the Zacks Consensus Estimate. However, earnings in the reported quarter were 24% higher than the year-ago quarter adjusted earnings of 34 cents per share.

Total revenue was $2,776 million, up 7% year over year from $2,605 million, but lagged the Zacks Consensus Estimate of $2,831 million by 2%.

RevPAR for worldwide comparable system-wide properties grew 6.7% during the quarter. International comparable system-wide RevPAR climbed up 7.2% year over year with a 3.0% increase in average daily rate.

In North America, comparable system-wide RevPAR leaped 6.5%, with the average daily rate up 4.3%.

Outlook

For the third quarter, the company estimates comparable system-wide REVPAR to increase in the range of 6% to 8% in North America, 5% to 7% outside North America and 6% to 8% worldwide. The company expects total fee revenue between $315 million and $325 million and earnings per share between 39 cents and 41 cents in the third quarter of 2012.

The company projects full year 2012 comparable system-wide REVPAR on a constant dollar basis to increase 6% to 8%, in North America and worldwide and 5% to 7% outside North America. The company forecasts total fee revenue in the range of $1,410 million to $1,440 million (earlier $1,425 million to $1,465 million). Earnings per share for 2012 are expected in the range of $1.65–$1.75, up from earlier projection of $1.58 to $1.69.

Zacks Consensus

The analysts covered by Zacks expect Marriott to post earnings of 40 cents per share for the third quarter of fiscal 2012, higher than the prior-year earnings of 29 cents. Currently, the Zacks Consensus Estimate ranges between 33 cents and 42 cents a share.
Earnings Estimate Revisions – Overview

Estimates have not budged in the last 30 days, implying that the analysts do not view any surprises ahead of the earnings release. Of the analysts covering the stock, 60% were positive while 40% adopted a neutral stance on the stock.

Agreement of Estimate Revisions

There has been no movement in the analysts’ estimates regarding the company’s earnings over the last 7 days due to the absence of any meaningful catalysts. However, in the last 30 days, for both 2012 and 2013, one analyst lowered the estimate while none moved in the opposite direction.

Magnitude of Estimate Revisions

Over the last 30 days, earnings for the third quarter remained at 40 cents, for 2012 remained at $1.70 and for 2013 it remained at $2.02. This implies that there have been no changes in estimates, as analysts expect the company to report in line.

Our Take

We remain neutral on the stock given the company’s strong pipeline, significant international exposure, solid balance sheet, aggressive buyback strategy, lower operating cost structure and increased market share. Moreover, we expect top line to improve further based on increased global demand, renovation of properties, modest supply growth, accelerating group business and strong pricing environment. Marriott’s deal to manage Gaylord also remains strategically sound. However, we remain cautious on the stock based on the economic uncertainty in Europe and slowdown in China resulting in lower consumer confidence. Additionally, increased competition and currency fluctuations remain major headwinds for the company.

Bethesda, Maryland-based Marriott currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

Another prominent hotelier, Starwood Hotels & Resorts Worldwide Inc. ( HOT - Analyst Report ) , will come up with its third-quarter 2012 earnings on October 25, 2012.