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Marriott (MAR) to Report Q3 Earnings: What's in the Offing?

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Marriott International, Inc. (MAR - Free Report) is scheduled to report third-quarter 2018 results on Nov 5, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 27.2%. Moreover, it delivered an average four-quarter positive earnings surprise of 14.7%.

How are Estimates Faring?

Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company prior to the release. For the quarter under review, the consensus estimate is pegged at $1.31, flat over the past 30 days. This reflects a gain of 19.1% from $1.10 registered in the year-ago quarter. Revenues are expected to be $5,374 million, down more than 5% year over year.

Factors at Play

Marriott’s top line in the third quarter is likely to be impacted by decline in revenues at owned, leases and other segmnet. However, base management, franchise and incentive management fees will continue to grow on a year-over-year basis.

The Zacks Consensus Estimate for owned, leases and other revenues is likely to move south 14.2% to $388 million. However, the same for base management, franchise and incentive management fees is expected to move north 8.6%, 14.1% and 14% to $292 million, $486 million and $155 million, respectively.

Solid revenue per available room (RevPAR) growth across both domestic and international markets bode well for the company. In the last reported quarter, RevPAR for worldwide comparable system-wide properties increased 3.8% in constant dollar (up 5.1% in actual dollars) driven by a 3.8% growth in occupancy and a 1.3% improvement in average daily rate (ADR). For the third quarter, the company had earlier said that it anticipates comparable system-wide RevPAR to increase in the range of 1.5-2% (on a constant-dollar basis) in North America. This reflects the unfavorable impact of the week shift of Independence Day. Outside North America, Marriott expects the same to rise in the band of 5-6% and worldwide in the 2.5-3% range.

Also, rising business and leisure travel backed by improving economic indicators and positive employment numbers along with strong transient demand are likely to drive Marriott’s performance.

Marriott International Price and EPS Surprise

What Does the Zacks Model Says?

Our proven model does not conclusively show that Marriott is likely to beat earnings estimates in the third 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 has an Earnings ESP of -1.15% and a Zacks Rank #3, making the surprise prediction difficult.

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

Stocks to Consider

Here are some other companies in the consumer discretionary sector that have the right combination of elements to deliver an earnings beat this quarter.

SeaWorld Entertainment, Inc. (SEAS - Free Report) has an Earnings ESP of +7.75% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

With a Zacks Rank #3, Playa Hotels & Resorts N.V. (PLYA - Free Report) has an Earnings ESP of +61.91%.

PlayAGS, Inc. (AGS - Free Report) has an Earnings ESP of +66.67% and a Zacks Rank #3.

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