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Dismal Occupancy to Hurt Marriott's (MAR) Earnings in Q2

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Marriott International, Inc. (MAR - Free Report) is scheduled to report second-quarter 2020 results on Aug 10, before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 69.1%.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter bottom line is pegged at a loss of 44 cents, against earnings of $1.56 reported in the prior-year quarter. Over the past 30 days, the company’s earnings estimates have been stable The Zacks Consensus Estimate for revenues stands at $1,398 million, suggesting a decline of 73.8% from the year-ago quarter.

Factors to Note

Marriot’s second-quarter results are likely to reflect the impact of the coronavirus pandemic. The company is likely to witness a sharp decline in RevPAR and occupancy rate.

Although the company is witnessing steady recovery in the U.S. and China markets, RevPAR and occupancy rate is still well below the pre-pandemic era. Per the reports, occupancy rates in China have increased from a low of 7% in February to approximately 40% in late May, while occupancy rates in the United States have crossed the 20% threshold. Earlier in April, the company had an occupancy rate of about 12% in North America, out of which 16% of hotels were temporarily closed. Even though the occupancy rates are improving, CEO Arne Sorenson stated that it might take a while for the company to reach its 2019 global occupancy levels of 71%.

Dismal RevPAR in Europe, Caribbean and Latin America, and the Middle East and Africa might get reflected in the to-be-reported quarter’s results. Moreover, increase in expenses is likely to have negatively impacted the company’s second-quarter performance.

Moreover, the Zacks Consensus Estimate for franchise fees is likely to decline 71.8% to $148 million, while the same for base management fees is expected to slump 80.3% to $61 million.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Marriott this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marriott has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.52%. 

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Consumer Discretionary sector that investors may consider as our model shows that these have the right combination of elements to come up with an earnings beat this quarter.

TEGNA Inc. (TGNA - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Malibu Boats, Inc. (MBUU - Free Report) has an Earnings ESP of +2.04% and a Zacks Rank of 2.

Madison Square Garden Entertainment Corp. (MSGE - Free Report) has an Earnings ESP of +16.15% and a Zacks Rank of 3.

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