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Marriott Vacations (VAC) Q2 Earnings: Will it Disappoint?

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Marriott Vacations Worldwide Corp. (VAC - Free Report) is scheduled to report second-quarter 2018 numbers on Aug 2, before the opening bell.

In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 7.3%. However, in three of the trailing four quarters, the bottom line surpassed the consensus mark by an average of 19.5%.

Let’s discuss how the company’s top and bottom line will shape up in the second quarter of 2018.

Factors at Play

Marriott Vacations’ top line in the second quarter might have been driven by distinguished marketing programs and continued surge in newest sales distribution. Recently, the company released its preliminary results, wherein it declared that vacation ownership contract sales amounted to $233 million, up 8% on year-over-year basis. Also, Marriott Vacations’ second-quarter revenues totaled $595 million, per the preliminary report. The Zacks Consensus Estimate for second-quarter revenues is pegged at $560 million.

Meanwhile, Marriott Vacations expects to directly benefit from reduced royalty fee, lower cost of Marriott Rewards points from Marriott and incremental co-marketing funds provided by the company’s credit card agreements.

Despite high expenses associated with hotel operations, we expect the company’s second-quarter earnings to increase backed by higher sales from various initiatives and cost savings resulting from joining Marriott on the reward program. The consensus estimate for second-quarter earnings stands at $1.84 per share compared with $1.60 reported in the second-quarter 2017. Also, adjusted EBITDA is anticipated in the range of $75-$77 million, a decline of $6-$8 million on a year-over-year basis.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Marriott Vacations is likely to beat earnings estimates in the second 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marriott Vacations has an Earnings ESP of -0.37% and a Zacks Rank #4 (Sell), consequently making the surprise prediction difficult.

Conversely, 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 in the Restaurant space that have the right combination of elements to deliver an earnings beat this quarter.

Restaurant Brands (QSR - Free Report) has an Earnings ESP of +1.17% and a Zacks Rank #3. It is scheduled to release second-quarter results on Aug 1, before the market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.

With a Zacks Rank #2, Wendy’s (WEN - Free Report) has an Earnings ESP of +1.59%. The company is slated to report its quarterly results on Aug 7, after market close.

Brinker (EAT - Free Report) has an Earnings ESP of +1.47% and a Zacks Rank of 3. The company is expected to report quarterly results on Aug 9.

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