It has been about a month since the last earnings report for Marriott Vacations Worldwide (
VAC Quick Quote VAC - Free Report) . Shares have lost about 14.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marriott due for a breakout? 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 Q4 Earnings & Revenues Miss Estimates
Marriott Vacations reported fourth-quarter 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. However, the top and bottom line increased on a year over year basis.
Earnings & Revenue Discussion
During the fourth quarter of 2022, the company reported adjusted earnings per share (EPS) of $2.74, missing the Zacks Consensus Estimate of $2.85 by 3.9%. In the year-ago quarter, the company had reported adjusted earnings of $2.38 per share.
Quarterly revenues of $1,188 million lagged the consensus mark of $1,228 million. However, the top line increased 8% on a year-over-year basis. Segmental Performances Vacation Ownership: During the fourth quarter, revenues in the segment totaled $1,113 million, up 9% from $1,021 million reported in the prior-year quarter. The segment’s adjusted EBITDA came in at $254 million, up 8% year over year. Exchange & Third-Party Management: The segment’s revenues totaled $62 million in the fourth quarter, down 12.7% from $71 million reported in the prior-year quarter. Revenues, excluding cost reimbursements, decreased 7% year over year. During the fourth quarter, interval international active members increased 21% year over year to 1.6 million, while average revenues per member declined 17% on a year-over-year basis. The segment’s adjusted EBITDA came in at $31 million, flat year over year. Corporate and Other Results
During the fourth quarter, general and administrative costs came in at $53 million, compared with $46 million in the prior-year quarter.
Expenses & EBITDA
Total expenses in the quarter increased 0.5% year over year to $992 million from $987 million reported in the year-ago quarter.
The company’s adjusted EBITDA in the fourth quarter amounted to $239 million compared with $219 million reported in the year-ago quarter. Balance Sheet
As of Dec 31, 2022, the company’s cash and cash equivalents were $524 million compared with $342 million as of Dec 31, 2021.
At the end of the fourth quarter, the company had $2.8 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable. 2023 Outlook
For 2023, the company anticipates contract sales in the range of $1,930-$2,000 million. Adjusted free cash flow is projected in the range of $600-$670 million. Adjusted EBITDA is expected to be between $950 million and $1,000 million. Adjusted fully diluted EPS for 2023 is expected to be between $10.75 and $11.54.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -18.51% due to these changes.
Currently, Marriott has a subpar Growth Score of D, a grade with the same score on the momentum front. 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.
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.