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Marriott (MAR) to Report Q4 Earnings: What's in the Cards?

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Marriott International, Inc. MAR is scheduled to report fourth-quarter 2019 results on Feb 26, after the closing bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.3% but revenues surpassed the same by 2.5%. On a year-over-year basis, earnings decreased 13.5% but revenues advanced 4.7%. Higher-than-expected tax rate and weaker-than-anticipated hotel performance in Hong Kong impacted profitability. Its performance reflected lower results in New York City and the impact of renovation at the Sheraton Grand Phoenix.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share has been unchanged over the past 60 days at $1.46. Nonetheless, this indicates an increase of 1.4% from the year-ago quarter. The consensus estimate for revenues is pegged at $5.52 billion, suggesting 4.3% year-over-year growth.

Factors to Note

Overall, higher franchise and base management fees, along with increasing demand for hotels in international markets are likely to have positively impacted Marriott’s top line, which will be reflected in fourth-quarter results.

The Zacks Consensus Estimate for franchise fees is pegged at $495 million, indicating an improvement of 8.8% from the year-ago quarter, while the same for base management fees is $301 million, suggesting 4.5% growth.

Increasing demand for hotels in international markets, strong room growth and expansion of Marriott’s brands are likely to get reflected in the company’s fourth-quarter results. Robust RevPAR growth in and outside North America is likely to have driven the top line in the fourth quarter. The company expects fourth-quarter comparable system-wide RevPAR to increase in the range of flat to up 1% in North America (in constant currency). Marriott anticipates the metric to rise 1% outside North America and 1% worldwide.

Marriott — which shares space with Hyatt Hotels Corporation H, Hilton Worldwide Holdings Inc. (HLT - Free Report) and Choice Hotels International, Inc. CHH in the Zacks Hotels and Motels industry — has been capitalizing on global travel trends in China, India and Indonesia. High population and a burgeoning middle class are expected to have benefited the company in generating profits in the quarter. However, weak economic conditions in China and Hong Kong are expected to have put pressure on Asia Pacific RevPAR in the fourth quarter. Also, continued supply pressure in the UAE is likely to have weighed on its Middle East RevPAR.

Earnings for the quarter are likely to increase in low single digits owing to higher tax rate. Meanwhile, earnings per share are envisioned in the $1.44-$1.47 band for the quarter.

Quantitative Model Prediction

Our proven model does not conclusively predict an earnings beat for Marriott this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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