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What's in Store for Mariott Vacations (VAC) in Q4 Earnings?

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Marriott Vacations Worldwide Corporation VAC is scheduled to report fourth-quarter 2020 results on Feb 24, after market close. In the last reported quarter, the company reported a negative earnings surprise of 35%.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter bottom line is pegged at a loss of 1 cent, suggesting a deterioration of 100.4% from $2.43 reported in the prior-year quarter.

For revenues, the consensus mark is at $724 million, suggesting a decline of 36.8% from the year-ago quarter’s levels.

 

Let’s analyse the factors that are likely to make an impact on the company’s quarterly performance.

Factors at Play

Marriott Vacations’ fourth-quarter performance is likely to reflect a gradual improvement in occupancy rates. On Jan 20, the company provided an business update, whereby occupancy rates surged back to the 70% range. Notably, occupancy rates at Florida Beach resorts, South Carolina resorts and Mountain Resorts increased from mid-60%, 70% and 75% in July to 70%, 75% and 80% in September, respectively. Also, occupancy rates at Newport Coast Resort (in Southern California) averaged 80% throughout the third quarter. Although sequential improvements in occupancy rates are likely during the fourth quarter (owing to hotel reopening’s and easing of travel restrictions), it is still expected to be below the pre-pandemic levels.

Apart from this, the company stated that preliminary contract sales for fourth-quarter 2020 amounted to $178 million, up more than 25% sequentially. While VPG in the fourth quarter jumped 9% year over year, tours declined 59%. Moreover, Interval international exchange transactions rose nearly 17%. However, average revenue per member declined nearly 4% year over year. Notably, these are likely to get reflected in the fourth-quarter top line. Also, operating costs stemming from the pandemic are likely to have hurt margins in the to-be-reported quarter.

However, increased focus on digital expansion, innovation and cost-saving efforts are likely to have driven the company’s fourth quarter 2020 results. Also, increased bookings in Hawaii (on account of Christmas and New Year's eve) are likely to get reflected in fourth-quarter top-line.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Marriott Vacations this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. But that's not the case here.

Earnings ESP: Marriott Vacations has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

AMC Entertainment Holdings, Inc. (AMC - Free Report) has a Zacks Rank #2 and an Earnings ESP of +14.69%.

Camping World Holdings, Inc. CWH has a Zacks Rank #2 and an Earnings ESP of +45.46%.

Churchill Downs Incorporated CHDN has a Zacks Rank #2 and an Earnings ESP of +146.91%.

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