A month has gone by since the last earnings report for Marriott International (
MAR Quick Quote MAR - Free Report) . Shares have added about 15.4% 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 Q4 Earnings Beat Estimates, Revenues Miss
Marriott reported mixed fourth-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the top and bottom lines declined sharply on a year-over-year basis.
In the quarter under review, Marriott’s adjusted earnings per share was 12 cents, which beat the Zacks Consensus Estimate of 10 cents. In the prior-year quarter, the company had reported adjusted earnings of $1.51 per share. Although the coronavirus pandemic continues to hurt the company’s results, it is witnessing rise in demand globally at varying rates. The company stated China is leading the global recovery. Quarterly revenues of $2,172 million missed the consensus mark of $2,425 million. Moreover, the top line declined 60% on a year-over-year basis. Base management and Franchise fee were $102 million and $277 million, down 66% and 45% year over year, respectively. Executive vice president and chief financial officer, Leeny Oberg, said: "In 2020, we moved swiftly to right-size our business in response to the precipitous decline in revenue by reducing costs, strengthening our balance sheet, and lowering capital spending. While the current environment remains challenging, we believe our financial condition is strong and we look ahead to the rest of 2021 with optimism." RevPAR & Margins
In the quarter under review, revenue per available room (RevPAR) for worldwide comparable system-wide properties fell 64.1% in constant dollars (down 63.9% in actual dollars) due to 35.6% and 27.4% decline in occupancy and average daily rate (ADR), respectively. These metrics were impacted by the coronavirus pandemic.
Comparable system-wide RevPAR in Asia Pacific slumped 46.4% in constant dollars due to 18.1% decline in ADR and 25.4% fall in occupancy. On a constant-dollar basis, international comparable system-wide RevPAR plunged 62.7% (down 62.2% in actual dollars) due to decline of 37.1% and 22.3% in occupancy and ADR, respectively. Total expenses fell 55% year over year to $2,300 million, primarily due to decline in Reimbursed expenses. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $317 million, down 65% year over year. Balance sheet
At the end of the fourth quarter, Marriott's total debt amounted to $10.4 billion, compared with $10.9 billion in December 2019. During the quarter, the company reduced its net debt by more than $600 million.
The company’s net liquidity at the end of quarter was nearly $4.4 billion. Due to uncertainty revolving around the crisis, the company temporarily suspended its share repurchase programs and dividend payouts. Unit Developments
At the end of fourth-quarter 2020, Marriott's development pipeline totaled nearly 2,900 hotels, with approximately 498,000 rooms. Further, nearly 229,000 rooms were under construction.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -85.6% due to these changes.
Currently, Marriott has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
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.