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Marriott Vacations Worldwide Corp. (VAC - Free Report) is feeling the impact of the Maui wildfire on business. This Zacks Rank #5 (Strong Sell) will see declining earnings this year.
Marriott Vacations is a global vacation company that offers vacation ownership, exchange, rental and resort and property management. It has over 120 vacation ownership resorts and approximately 700,000 owner families across its diverse portfolio. It's brands include Marriott Vacation Club, Sheraton Vacation Club, Westin Vacation Club, The Ritz Carlton Club, Grand Residences by Marriott, the St Regis Residence Club, and the Hyatt Vacation Club, among others.
It also has an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries, and provides management services to other resorts and lodging properties.
A Big Miss in the Third Quarter
On Nov 1, 2023, Marriott Vacations Worldwide reported its third quarter results and missed for the second quarter in a row. It reported just $1.20 versus the Zacks Consensus of $2.19. That's a miss of 45.2%.
Consolidated vacation ownership contract sales were $438 million and volume per guest ("VPG") increased $87 sequentially from the second quarter, or 2% to $4,055. Marriott Vacations estimated that the Maui wildfires negatively impacted contract sales by $28 million and VPG by about $66, or 2%, in the quarter.
On Aug 8, 2023, a wildfire devastated parts of West Maui. The company operates 4 vacation ownership resorts and sales centers in the area of the fire, but none of them sustained any physical damage. However, the fire still impacted contract sales as the island has been slow to regain confidence with tourists.
It also recorded a $59 million charge to its loan loss provision in the third quarter.
“We had a difficult quarter between the devastating wildfires in Maui and default rates on our loan portfolio remaining above our recent experience. However, our loan delinquencies are stabilizing and with Maui reopen for tourism we have started to see our resort occupancies recover,” said John Geller, president and CEO.
Estimates Cut for the Full Year
Marriott Vacations expects to continue to see impacts from the fire in the fourth quarter. Contract sales are expected to be impacted by $32 to $37 million.
For the full year, the fire is expected to impact contract sales by $60 to $65 million. The new full year contract sales guidance is for $1.75 billion to $1.77 billion.
Earnings for the full year are now expected to be between $7.44 to $7.78, with impacts from the fire of $0.85 to $0.94.
As a result, the analysts have had to cut their earnings estimates. 6 have been lowered in the last 2 months for 2023, which has pushed the Zacks Consensus Estimate down to $7.49 from $9.15. That's at the lower end of the guidance.
It's also a decline of 27% from last year when Marriott Vacations made $10.26.
Analysts are bearish on 2024 too. 7 estimates were lowered in the last two months, pushing the Zacks Consensus down to $7.85 from $10.04.
As a result, the price and consensus chart is going the wrong way.
Image Source: Zacks Investment Research
Shares Sink in 2023
Shares of Marriott Vacations have sunk 35.1% year-to-date. That's going the opposite direction of the S&P 500.
Image Source: Zacks Investment Research
While the fire struck in August, the shares were already weak in the months prior to that event.
However, Marriott Vacations is now cheap, with a forward P/E of just 11.7. It also pays a dividend, which it recently raised 5%. It is currently yielding 3.5%.
But between the impacts of the fire and the loan losses, 2024 looks uncertain. Investors interested in the vacation club companies like Marriott Vacations might want to wait on the sidelines for the earnings to improve.
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Bear of the Day: Marriott Vacations (VAC)
Marriott Vacations Worldwide Corp. (VAC - Free Report) is feeling the impact of the Maui wildfire on business. This Zacks Rank #5 (Strong Sell) will see declining earnings this year.
Marriott Vacations is a global vacation company that offers vacation ownership, exchange, rental and resort and property management. It has over 120 vacation ownership resorts and approximately 700,000 owner families across its diverse portfolio. It's brands include Marriott Vacation Club, Sheraton Vacation Club, Westin Vacation Club, The Ritz Carlton Club, Grand Residences by Marriott, the St Regis Residence Club, and the Hyatt Vacation Club, among others.
It also has an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries, and provides management services to other resorts and lodging properties.
A Big Miss in the Third Quarter
On Nov 1, 2023, Marriott Vacations Worldwide reported its third quarter results and missed for the second quarter in a row. It reported just $1.20 versus the Zacks Consensus of $2.19. That's a miss of 45.2%.
Consolidated vacation ownership contract sales were $438 million and volume per guest ("VPG") increased $87 sequentially from the second quarter, or 2% to $4,055. Marriott Vacations estimated that the Maui wildfires negatively impacted contract sales by $28 million and VPG by about $66, or 2%, in the quarter.
On Aug 8, 2023, a wildfire devastated parts of West Maui. The company operates 4 vacation ownership resorts and sales centers in the area of the fire, but none of them sustained any physical damage. However, the fire still impacted contract sales as the island has been slow to regain confidence with tourists.
It also recorded a $59 million charge to its loan loss provision in the third quarter.
“We had a difficult quarter between the devastating wildfires in Maui and default rates on our loan portfolio remaining above our recent experience. However, our loan delinquencies are stabilizing and with Maui reopen for tourism we have started to see our resort occupancies recover,” said John Geller, president and CEO.
Estimates Cut for the Full Year
Marriott Vacations expects to continue to see impacts from the fire in the fourth quarter. Contract sales are expected to be impacted by $32 to $37 million.
For the full year, the fire is expected to impact contract sales by $60 to $65 million. The new full year contract sales guidance is for $1.75 billion to $1.77 billion.
Earnings for the full year are now expected to be between $7.44 to $7.78, with impacts from the fire of $0.85 to $0.94.
As a result, the analysts have had to cut their earnings estimates. 6 have been lowered in the last 2 months for 2023, which has pushed the Zacks Consensus Estimate down to $7.49 from $9.15. That's at the lower end of the guidance.
It's also a decline of 27% from last year when Marriott Vacations made $10.26.
Analysts are bearish on 2024 too. 7 estimates were lowered in the last two months, pushing the Zacks Consensus down to $7.85 from $10.04.
As a result, the price and consensus chart is going the wrong way.
Image Source: Zacks Investment Research
Shares Sink in 2023
Shares of Marriott Vacations have sunk 35.1% year-to-date. That's going the opposite direction of the S&P 500.
Image Source: Zacks Investment Research
While the fire struck in August, the shares were already weak in the months prior to that event.
However, Marriott Vacations is now cheap, with a forward P/E of just 11.7. It also pays a dividend, which it recently raised 5%. It is currently yielding 3.5%.
But between the impacts of the fire and the loan losses, 2024 looks uncertain. Investors interested in the vacation club companies like Marriott Vacations might want to wait on the sidelines for the earnings to improve.