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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
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Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, improvement in occupancy rates and digital initiatives. This and the focus on strategic partnerships bode well. However, increased expenses are a concern.
Let’s discuss the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during fourth-quarter 2022. While occupancies and tours are witnessing growth in the fourth quarter, VPGs remain well above the 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $454 million in the fourth quarter of 2022, up 12% from $406 million reported in the prior-year quarter. For 2023, VAC anticipates contract sales to grow in the range of 5-9% (on a year-over-year basis), backed by an increase in tours and strength in VPGs.
Marriott Vacations have been witnessing improvement in occupancy rates, highlighting people’s willingness to go on vacations. During the fourth quarter of 2022, the company reported solid occupancies with respect to its Aqua-Aston business. The company reported year-over-year growth in occupancies and RevPAR. Also, it reported a solid recovery in domestic markets (Hawaii) and Asia-Pacific. Much optimism prevails as the company noted increasing customer willingness to resume travel.
Marriott Vacations emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it emphasizes on implementing an online booking engine (for previews) and improving predictive modeling (for marketing campaigns) to drive growth.
The company continues to use technology to lower back-office costs and enhance associates' experience by leveraging artificial intelligence to augment and automate many high-volume internal transactional processes. Also, the company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, providing users with more destinations and flexible usage options across the Marriott-branded portfolio.
VAC focuses on its partnership with Interval International to provide its members with comprehensive exchange services and various other benefits that offer value and convenience. During the first quarter of 2022, the company renewed its agreement with Westgate Resorts, extending its tenured affiliations for another five years. Given growth in the tour package pipeline, the company anticipates the initiative to drive tours and sales in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have gained 1.4% in the past six months compared with the industry’s 16.6% growth. The downside was mainly due to inflationary pressures. During the fourth quarter of 2022, total expenses in the quarter increased 5.6% year over year to $987 million from $935 million reported in the year-ago quarter. Escalated marketing and sales expenses and management and exchange costs affected total costs. The company anticipates the inflationary environment to affect margins for some time.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
Cedar Fair sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 64.5%, on average. The stock has declined 10.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FUN’s 2024 sales and EPS indicates a rise of 2% and 6.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 9.2% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 81.1% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, improvement in occupancy rates and digital initiatives. This and the focus on strategic partnerships bode well. However, increased expenses are a concern.
Let’s discuss the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during fourth-quarter 2022. While occupancies and tours are witnessing growth in the fourth quarter, VPGs remain well above the 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $454 million in the fourth quarter of 2022, up 12% from $406 million reported in the prior-year quarter. For 2023, VAC anticipates contract sales to grow in the range of 5-9% (on a year-over-year basis), backed by an increase in tours and strength in VPGs.
Marriott Vacations have been witnessing improvement in occupancy rates, highlighting people’s willingness to go on vacations. During the fourth quarter of 2022, the company reported solid occupancies with respect to its Aqua-Aston business. The company reported year-over-year growth in occupancies and RevPAR. Also, it reported a solid recovery in domestic markets (Hawaii) and Asia-Pacific. Much optimism prevails as the company noted increasing customer willingness to resume travel.
Marriott Vacations emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it emphasizes on implementing an online booking engine (for previews) and improving predictive modeling (for marketing campaigns) to drive growth.
The company continues to use technology to lower back-office costs and enhance associates' experience by leveraging artificial intelligence to augment and automate many high-volume internal transactional processes. Also, the company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, providing users with more destinations and flexible usage options across the Marriott-branded portfolio.
VAC focuses on its partnership with Interval International to provide its members with comprehensive exchange services and various other benefits that offer value and convenience. During the first quarter of 2022, the company renewed its agreement with Westgate Resorts, extending its tenured affiliations for another five years. Given growth in the tour package pipeline, the company anticipates the initiative to drive tours and sales in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have gained 1.4% in the past six months compared with the industry’s 16.6% growth. The downside was mainly due to inflationary pressures. During the fourth quarter of 2022, total expenses in the quarter increased 5.6% year over year to $987 million from $935 million reported in the year-ago quarter. Escalated marketing and sales expenses and management and exchange costs affected total costs. The company anticipates the inflationary environment to affect margins for some time.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Cedar Fair, L.P. (FUN - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) and Crocs, Inc. (CROX - Free Report) .
Cedar Fair sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 64.5%, on average. The stock has declined 10.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FUN’s 2024 sales and EPS indicates a rise of 2% and 6.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 9.2% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 81.1% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.