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Why Is Marriott (VAC) Up 6.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC - Free Report) . Shares have added about 6.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marriott due for a pullback? 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 drivers.
Marriott Vacations Q2 Earnings Miss Estimates, Down Y/Y
Marriott Vacations Worldwide reported mixed results for second-quarter 2020, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same.
In the quarter under review, adjusted loss per shares came in at $1.76, wider than the Zacks Consensus Estimate of a loss of $1.11. In the prior-year quarter, the company had reported adjusted earnings of $2 per share.
Total revenues of $480 million beat the consensus mark of $450 million by 6.7%. However, the top line declined 54% on a year-over-year basis.
Segmental Performances
Vacation Ownership: During the second quarter, the segments revenues decreased 56.2% year over year to $405 million, compared with $924 million as on Jun 30, 2019. The decline was primarily attributed to lower resort occupancies resulting from the coronavirus pandemic.
Revenues excluding cost reimbursements fell 69% year over year owing to 92% decline in contract sales and a 91% decrease in rental revenues, partially offset by growth in management fees and financing revenue.
The segment’s adjusted EBITDA came in at ($19) million, against $203 million reported in the prior year quarter.
Exchange & Third-Party Management: The segment’s revenues totaled $58 million in the quarter, down 50% from year-ago quarter’s figure of $116 million. The decline was primarily attributed to lower exchange and rental transactions in its Interval International business, due to the impact of the coronavirus pandemic.
During the second quarter, total Interval Network active members declined 7% year over year to 1.6 million, while interval International average revenue per member fell 30% to $30.17. The segment’s adjusted EBITDA decreased 58.7%, year over year to $41 million.
Corporate and Other results
The segment, which primarily consists of general and administrative costs, improved $45 million year over year, courtesy of synergy savings and decline in compensation related expenses. It also included $6 million credit under the CARES Act legislation, thereby motivating the company to pay associates' benefit costs while not working.
Expenses & EBITDA
Total expenses in the quarter declined 42.1% year over year, to $521 million, compared with $900 million reported in the year ago quarter.
The company’s adjusted EBITDA in the second quarter came in at ($10) million, against $195 million reported in the year ago quarter.
Balance Sheet
Cash and cash equivalents, as of Jun 30, 2020, was $566 million. The company had $4.6 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the first quarter, up $0.5 billion from year-end 2019. This includes $2.7 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.
During the second quarter, the company issued $500 million of senior secured notes and repaid the entire outstanding balance on its Revolving Corporate Credit Facility.
Owing to the uncertainty revolving around the global pandemic, the company has temporarily suspended its share repurchases and dividend payouts.
Operational Update
Marriott Vacations has started reopening its resorts and sales centers amid the global pandemic. As of Jun 30, the company had opened eight sales centers in its vacation ownership business. Additional 34 sales centers have been reopened since then.
As on Jul 29, 2020, fewer than 240 resorts remain closed in its Interval International business.
Resultantly 40% of its associates are still on furlough while 16% are on reduced work week (or reduced pay). However, for those who have returned from furlough, majority have been assigned on the resort operations area.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -340.56% due to these changes.
VGM Scores
Currently, Marriott has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Marriott has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Marriott (VAC) Up 6.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC - Free Report) . Shares have added about 6.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marriott due for a pullback? 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 drivers.
Marriott Vacations Q2 Earnings Miss Estimates, Down Y/Y
Marriott Vacations Worldwide reported mixed results for second-quarter 2020, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same.
In the quarter under review, adjusted loss per shares came in at $1.76, wider than the Zacks Consensus Estimate of a loss of $1.11. In the prior-year quarter, the company had reported adjusted earnings of $2 per share.
Total revenues of $480 million beat the consensus mark of $450 million by 6.7%. However, the top line declined 54% on a year-over-year basis.
Segmental Performances
Vacation Ownership: During the second quarter, the segments revenues decreased 56.2% year over year to $405 million, compared with $924 million as on Jun 30, 2019. The decline was primarily attributed to lower resort occupancies resulting from the coronavirus pandemic.
Revenues excluding cost reimbursements fell 69% year over year owing to 92% decline in contract sales and a 91% decrease in rental revenues, partially offset by growth in management fees and financing revenue.
The segment’s adjusted EBITDA came in at ($19) million, against $203 million reported in the prior year quarter.
Exchange & Third-Party Management: The segment’s revenues totaled $58 million in the quarter, down 50% from year-ago quarter’s figure of $116 million. The decline was primarily attributed to lower exchange and rental transactions in its Interval International business, due to the impact of the coronavirus pandemic.
During the second quarter, total Interval Network active members declined 7% year over year to 1.6 million, while interval International average revenue per member fell 30% to $30.17. The segment’s adjusted EBITDA decreased 58.7%, year over year to $41 million.
Corporate and Other results
The segment, which primarily consists of general and administrative costs, improved $45 million year over year, courtesy of synergy savings and decline in compensation related expenses. It also included $6 million credit under the CARES Act legislation, thereby motivating the company to pay associates' benefit costs while not working.
Expenses & EBITDA
Total expenses in the quarter declined 42.1% year over year, to $521 million, compared with $900 million reported in the year ago quarter.
The company’s adjusted EBITDA in the second quarter came in at ($10) million, against $195 million reported in the year ago quarter.
Balance Sheet
Cash and cash equivalents, as of Jun 30, 2020, was $566 million.
The company had $4.6 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the first quarter, up $0.5 billion from year-end 2019. This includes $2.7 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.
During the second quarter, the company issued $500 million of senior secured notes and repaid the entire outstanding balance on its Revolving Corporate Credit Facility.
Owing to the uncertainty revolving around the global pandemic, the company has temporarily suspended its share repurchases and dividend payouts.
Operational Update
Marriott Vacations has started reopening its resorts and sales centers amid the global pandemic. As of Jun 30, the company had opened eight sales centers in its vacation ownership business. Additional 34 sales centers have been reopened since then.
As on Jul 29, 2020, fewer than 240 resorts remain closed in its Interval International business.
Resultantly 40% of its associates are still on furlough while 16% are on reduced work week (or reduced pay). However, for those who have returned from furlough, majority have been assigned on the resort operations area.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -340.56% due to these changes.
VGM Scores
Currently, Marriott has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Marriott has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.