It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC Quick QuoteVAC - Free Report) . Shares have lost about 11.6% 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 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 Q3 Earnings & Revenues Lag Estimates

Marriott Vacations reported dismal third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined year over year.

Earnings & Revenue Discussion

During third-quarter 2023, Marriott Vacations reported adjusted earnings per share (EPS) of $1.20, missing the Zacks Consensus Estimate of $2.19 by 45.2%. In the year-ago quarter, it reported an adjusted EPS of $3.02.

Quarterly revenues of $1,186 million missed the consensus mark of $1,201 million by 1.3%. The top line declined 5.3% on a year-over-year basis.

Segmental Performances

Vacation Ownership: During the third quarter, the segment’s revenues totaled $1,126 million, down 4.7% from $1,182 million reported in the prior-year quarter.

During the quarter, the company’s Vacation Ownership contract sales fell 9.3% year over year to $438 million. The downside was primarily caused by a 7% decline in VPG, a 3% decline in tours and a $59 million increase in its loan loss provision. This and the impact of the Maui wildfires added to the downside.

The segment’s adjusted EBITDA during the quarter came in at $195 million, down 23.5% from $255 million reported in the prior-year quarter.

Exchange & Third-Party Management: The segment’s revenues of $64 million declined 9.9% from $71 million reported in the year-ago quarter. Revenues, excluding cost reimbursements, declined 7% year over year.

During third-quarter 2023, interval international active members dropped 1% year over year to 1.6 million. Average revenues per member inched up 1% on a year-over-year basis. Adjusted EBITDA was $31 million, down 20.5% year over year.

Corporate and Other Results

During the third quarter, general and administrative costs totaled $57 million, down 8% year over year.

Expenses & EBITDA

During the quarter, total expenses increased 6.8% year over year to $1,081 million from $1,012 million reported in the year-ago quarter. Our estimate for the metric was $1,082.9 million.

Adjusted EBITDA amounted to $150 million compared with $240 million reported in the prior-year quarter. The company anticipates a $24 million negative impact on Adjusted EBITDA from the Maui wildfires and a $49 million impact from the increased loan loss provision in the quarter.

Balance Sheet

As of Sep 30, 2023, Marriott Vacations’ cash and cash equivalents were $265 million compared with $242 million as of Jun 30, 2023.

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

2023 Outlook

The company has lowered its 2023 expectations considering the estimated impact of the Maui wildfires.

For 2023, management now anticipates contract sales in the range of $1,750-$1,770 million compared with the previous expectation of $1,840-$1,900 million. Adjusted free cash flow is projected in the range of $430-$460 million compared with the prior projection of $540-$600 million. Adjusted EBITDA is estimated to be between $745 million and $765 million compared with the previous anticipation of $880 million and $910 million.

Adjusted EPS is expected to be between $7.44 and $7.78, down from the prior estimate of $9.76 and $10.22.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -30.43% 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 C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 is part of the Zacks Hotels and Motels industry. Over the past month, Hilton Worldwide Holdings Inc. (HLT Quick QuoteHLT - Free Report) , a stock from the same industry, has gained 9.8%. The company reported its results for the quarter ended September 2023 more than a month ago.

Hilton Worldwide Holdings Inc. reported revenues of $2.67 billion in the last reported quarter, representing a year-over-year change of +12.9%. EPS of $1.67 for the same period compares with $1.31 a year ago.

Hilton Worldwide Holdings Inc. is expected to post earnings of $1.55 per share for the current quarter, representing a year-over-year change of -2.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hilton Worldwide Holdings Inc. Also, the stock has a VGM Score of B.