It has been about a month since the last earnings report for Marriott International (
MAR Quick Quote MAR - Free Report) . Shares have added about 34.4% in that time frame, outperforming 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 catalysts.
Marriott Q3 Earnings Beat Estimates, Revenues Miss
Marriott reported third-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the top and bottom lines declined on a year-over-year basis.
In the quarter under review, Marriott’s adjusted earnings per share was 6 cents, comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. In the prior-year quarter, the company had reported adjusted earnings of $1.47 per share. Although the coronavirus pandemic continues to hurt the company’s results, it is witnessing rise in demand globally. The company stated that Greater China has been leading the recovery. Quarterly revenues of $2,254 million missed the consensus mark of $2,395 million. Moreover, the top line declined 57.3% on a year-over-year basis. Base management and Franchise fee were $87 million and $279 million, down 70% and 47% year over year, respectively. RevPAR & Margins
In the quarter under review, revenue per available room (RevPAR) for worldwide comparable system-wide properties fell 65.9% in constant dollars (down 65.9% in actual dollars) due to 40.8% and 26.4% decline in occupancy and average daily rate (ADR), respectively. These metrics were impacted by the coronavirus pandemic.
Comparable system-wide RevPAR in North America fell 65.4% in constant dollars (down 65.4% in actual dollars) due to 27.6% decline in ADR and 40.3% fall in occupancy. On a constant-dollar basis, international comparable system-wide RevPAR slumped 67.4% (down 67.3% in actual dollars) due to decline of 43.5% and 25.5% in occupancy and ADR, respectively. Total expenses fell 57% year over year to $2,002 million, primarily due to decline in Reimbursed expenses. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $442 million, down 46% year over year. Balance sheet
At the end of the third quarter, Marriott's total debt amounted to $9.4 billion, compared with $10.9 billion in December 2019. During the quarter, the company’s cash balances totaled $1.5 billion compared with $225 million in December 2019. Owing to uncertainty revolving around the crisis, the company temporarily suspended its share repurchase programs and dividend payouts.
At the end of the third-quarter 2020, Marriott's development pipeline totaled nearly 2,900 hotels, with approximately 496,000 rooms. Further, nearly 228,000 rooms were under construction.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -30.16% due to these changes.
Currently, Marriott has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 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.
Marriott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.