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Marriott (MAR) Q2 Earnings: Is a Disappointment in Store?

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Marriott International, Inc. (MAR - Free Report) is scheduled to report second-quarter 2017 numbers on Aug 7, after market close.

Last quarter, Marriott came up with a positive earnings surprise of 12.22%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four-quarters, with an average beat of 5.21%.

Let’s see how things are shaping up for this announcement.

Marriott International Price and EPS Surprise


Marriott International Price and EPS Surprise | Marriott International Quote

Factors Likely to Influence Q2 Results

For the second quarter, earnings per share are estimated between 99 cents and $1.03. Notably, Marriott’s earnings have been surpassing the Zacks Consensus Estimate consistently in the last 12 quarters. Given the company’s increased scale and distribution post Starwood purchase, its top-line is likely get a boost in the to-be-reported quarter. This, in turn, should drive the bottom-line and aid in keeping up the earnings streak.

Meanwhile, Marriott expects comparable system-wide revenue per available room (RevPAR) to be flat to up 2% in North America on a constant dollar basis. RevPAR for worldwide comparable system-wide properties is projected to inch up in the range of 1- 3%. Outside North America, the company expects the same to increase in the 3- 5% band. Notably, the company's RevPAR guidance for the second quarter reflects the unfavorable shift of Easter into the same period.

The company also anticipates fee revenues between $820 million and $835 million. While the operating income is projected in the range of $620-$640 million, general, administrative and other expenses are projected between $220 million and $225 million.

Moreover, increasing business and leisure travel on the back of improving economic indicators and positive employment numbers, along with strong transient demand might boost performance. Marriott’s rising North American business and large international exposure are also expected to drive growth in the quarter. Furthermore, investments in technology for hotel bookings are likely to improve guest experience, which in turn is anticipated to boost occupancy.

However, lingering global uncertainty in some key operating regions is likely to limit revenue growth. Also, heightened competition in the domestic market given increased supply is expected to mar second-quarter RevPAR.

Additionally, the company has been witnessing fewer international guests at its U.S. hotels for the last few quarters, given the stronger dollar. This, in turn, may hurt revenues and profits in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show earnings beat for Marriott this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Marriott has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.02. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marriott has a Zacks Rank #4 (Sell).

Notably, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider in the Consumer Discretionary sector as our model shows they have the right combination of elements to post an earnings beat this quarter:

Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) has an Earnings ESP of +1.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eldorado Resorts, Inc. (ERI - Free Report) has an Earnings ESP of +12.00% and a Zacks Rank #3.

Nexstar Media Group, Inc. (NXST - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank #3.

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