It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC Quick QuoteVAC - Free Report) . Shares have lost about 2.5% 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 Vacations Worldwide 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 Q2 Earnings Lag Estimates

Marriott Vacations reported second-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate. The top line increased year over year, while the bottom line fell from the prior-year quarter’s figure.

Earnings & Revenue Discussion

During second-quarter 2023, Marriott Vacations reported adjusted earnings per share (EPS) of $2.19, missing the Zacks Consensus Estimate of $2.81 by 22.1%. In the year-ago quarter, it reported an adjusted EPS of $2.87.

Quarterly revenues of $1,178 million missed the consensus mark of $1,242 million by 5.1%. However, the top line increased 1.2% on a year-over-year basis.

Segmental Performances

Vacation Ownership: During the second quarter, the segment’s revenues totaled $1,112 million, up 1.9% from $1,091 million reported in the prior-year quarter.

During the quarter, the company’s Vacation Ownership contract sales fell 10% year over year to $453 million. The downside was primarily driven by larger-than-expected Volumes Per Guest (or VPG) declines, particularly at the legacy-Vistana sites. This and the continued transition to the Abound by Marriott Vacations program and the integration of Hyatt and legacy-Welk business models and sales processes added to the downside.

The segment’s adjusted EBITDA during the quarter came in at $245 million, down 11% from $274 million reported in the prior-year quarter.

Exchange & Third-Party Management: The segment’s revenues of $65 million declined 12.2% from $74 million reported in the year-ago quarter. Revenues, excluding cost reimbursements, declined 11% year over year.

During second-quarter 2023, interval international active members dropped 2% year over year to 1.6 million. Average revenues per member inched up 1% on a year-over-year basis. Adjusted EBITDA was $32 million, down 10% year over year.

Corporate and Other Results

During the second quarter, general and administrative costs totaled $64 million, reflecting no change from the prior-year quarter’s levels. Our estimate for the metric was $66.7 million.

Expenses & EBITDA

During the quarter, total expenses increased 4.8% year over year to $1,003 million from $957 million reported in the year-ago quarter.

Adjusted EBITDA amounted to $222 million compared with $255 million reported in the prior-year quarter.

Balance Sheet

As of Jun 30, 2023, Marriott Vacations’ cash and cash equivalents were $242 million compared with $306 million as of Mar 31, 2023.

At the end of the second quarter, the company had $3 billion of corporate debt and $2 billion of non-recourse debt related to its securitized notes receivable.

2023 Outlook

For 2023, management anticipates contract sales in the range of $1,840-$1,900 million compared with the previous expectation of $1,930-$2,000 million. Adjusted free cash flow is projected in the range of $540-$600 million compared with the prior projection of $600-$670 million. Adjusted EBITDA is estimated to be between $880 million and $910 million compared with the previous anticipation of $950 million and $1,000 million.

Adjusted EPS is expected to be between $9.76 and $10.22, down from the prior estimate of $11.05 and $11.85.

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 -14.54% due to these changes.

VGM Scores

Currently, Marriott Vacations Worldwide has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Marriott Vacations Worldwide has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Marriott Vacations Worldwide belongs to the Zacks Hotels and Motels industry. Another stock from the same industry, Marriott International (MAR Quick QuoteMAR - Free Report) , has gained 1.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

Marriott reported revenues of $6.08 billion in the last reported quarter, representing a year-over-year change of +13.8%. EPS of $2.26 for the same period compares with $1.80 a year ago.

For the current quarter, Marriott is expected to post earnings of $2.09 per share, indicating a change of +23.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Marriott. Also, the stock has a VGM Score of C.