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Marriott (VAC) Down 5.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Marriott Vacations Worldwide (VAC - Free Report) . Shares have lost about 5.4% 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 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 catalysts.

Marriott Vacations Q1 Earnings Miss Estimates 

Marriott Vacations reported first-quarter 2020 financial results wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. The company reported adjusted earnings per share of $1.71 per share, comparing unfavorably with the consensus estimate of $2.15. Revenues dipped 2.3% year over year to $1,010 million but surpassed the consensus estimate of $996 million.

Segmental Performances

Vacation Ownership: Consolidated Vacation Ownership contract sales totaled $908 million, up 0.3% year over year on a combined basis. On a combined basis, the segment’s adjusted EBITDA decreased 15% year over year to $147 million in the first quarter. 

Exchange & Third-Party Management: The segment’s revenues totaled $107 million in the quarter, down from year-ago quarter’s figure of $124 million. Total Interval Network active members were 1.6 million at the end of the quarter and average revenue per member was $41.3. The segment’s adjusted EBITDA decreased 24% to $41 million.

Corporate and Other results

The segment, which primarily consists of general and administrative costs, decreased $10 million in first-quarter 2020 due to synergy savings and decline in compensation related expenses. This was marginally overshadowed by normal inflationary cost increases.

Expenses & EBITDA

Total expenses in the quarter came in at $1,060 million, compared with $943 million in the prior-year quarter. The company’s adjusted EBITDA declined to $138 million from $166 million at the end of Mar 31, 2019.

 Balance Sheet

Cash and cash equivalents, as of Mar 31, 2020, was $651 million. Inventory was $846 million. The company had $4.7 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the first quarter, up $0.6 billion from year-end 2019.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -12.36% due to these changes.

VGM Scores

At this time, Marriott has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 this revision indicates a downward shift. Notably, Marriott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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