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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
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Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. This and improvement in occupancy rates bode well. However, coronavirus-induced disruptions and increased expenses are a concern.
Let’s delve deeper into the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during first-quarter 2022. While both occupancies and tours are witnessing growth in the first quarter, VPGs remain well above the 2019 levels. VAC reported contract sales of $394 million in the first quarter of 2022, thereby exceeding the 2019 levels. For 2022, VAC anticipates contract sales to rise 22-29%, backed by increased tours and strength in VPGs.
VAC emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Also, the company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, thereby allowing users with more destinations and flexible usage options across the Marriott-branded portfolio. Given the positive owner feedback, the company remains optimistic in this regard. It anticipates completing the development of the related technology and officially launching the product in summer 2022.
Marriott Vacations focuses on high vacation ownership business to drive growth. In April 2022, the company rebranded Welk's points program as the Hyatt Vacation Club Platinum program and allowed the conversion of Welk sales centers to sell Hyatt-branded vacation ownership products. The Platinum program includes expanded vacation benefits and access to a collection of upscale resorts. It stated that initiatives concerning Welk owners with the ability to trade their points for World of Hyatt points are in the pipeline. Meanwhile, VAC focuses on its partnership with Interval International to provide its members with comprehensive exchange services and a variety of other benefits that offer value and convenience. During the first quarter of 2022, the company renewed its agreement with Westgate Resorts, extending its tenured affiliations for another five years. Given growth in the tour package pipeline, the company anticipates the initiative to drive tours and sales in the upcoming periods.
Marriott Vacations have been witnessing improvement in occupancy rates, thereby highlighting people’s willingness to go on vacations. During first-quarter 2022, the company reports solid occupancies with respect to its vacation ownership business. Despite a lag in recovery in certain urban and international markets due to the Omicron variant, the company reported total occupancy of 88%, in line with pre-covid levels. Also, it reported the return of international travelers to key domestic markets like Florida and Hawaii. Going forward, much optimism prevails as the company noted increasing willingness among customers to resume travel.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have dropped 10.8% so far this year compared with the industry’s fall of 5%. The decline was mainly due to the coronavirus crisis. During the first quarter, the company’s operations were affected by coronavirus-induced supply chain disruptions and inflationary pressures. Although improvements were noted in rental occupancies because of easing travel restrictions and quarantine requirements, the company stated complete recovery to take time. Uncertainty related to pandemic-induced implications remains a concern.
Marriott Vacations has been bearing the brunt of steep expenses for some time now. During the first quarter of 2022, total expenses in the quarter increased 23.3% year over year to $911 million from $739 million reported in the year-ago quarter. Escalated marketing and sales expenses along with management and exchange costs affected total costs. This and a rise in wage and gas costs added to the downside. Going forward, costs are likely to rise due to the coronavirus impact.
Civeo sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have increased 77.7% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and earnings per share (EPS) suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.
Bluegreen Vacations carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has increased 46.6% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Funko carries a Zacks Rank #2. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have declined 6% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.
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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. This and improvement in occupancy rates bode well. However, coronavirus-induced disruptions and increased expenses are a concern.
Let’s delve deeper into the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during first-quarter 2022. While both occupancies and tours are witnessing growth in the first quarter, VPGs remain well above the 2019 levels. VAC reported contract sales of $394 million in the first quarter of 2022, thereby exceeding the 2019 levels. For 2022, VAC anticipates contract sales to rise 22-29%, backed by increased tours and strength in VPGs.
VAC emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Also, the company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, thereby allowing users with more destinations and flexible usage options across the Marriott-branded portfolio. Given the positive owner feedback, the company remains optimistic in this regard. It anticipates completing the development of the related technology and officially launching the product in summer 2022.
Marriott Vacations focuses on high vacation ownership business to drive growth. In April 2022, the company rebranded Welk's points program as the Hyatt Vacation Club Platinum program and allowed the conversion of Welk sales centers to sell Hyatt-branded vacation ownership products. The Platinum program includes expanded vacation benefits and access to a collection of upscale resorts. It stated that initiatives concerning Welk owners with the ability to trade their points for World of Hyatt points are in the pipeline. Meanwhile, VAC focuses on its partnership with Interval International to provide its members with comprehensive exchange services and a variety of other benefits that offer value and convenience. During the first quarter of 2022, the company renewed its agreement with Westgate Resorts, extending its tenured affiliations for another five years. Given growth in the tour package pipeline, the company anticipates the initiative to drive tours and sales in the upcoming periods.
Marriott Vacations have been witnessing improvement in occupancy rates, thereby highlighting people’s willingness to go on vacations. During first-quarter 2022, the company reports solid occupancies with respect to its vacation ownership business. Despite a lag in recovery in certain urban and international markets due to the Omicron variant, the company reported total occupancy of 88%, in line with pre-covid levels. Also, it reported the return of international travelers to key domestic markets like Florida and Hawaii. Going forward, much optimism prevails as the company noted increasing willingness among customers to resume travel.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have dropped 10.8% so far this year compared with the industry’s fall of 5%. The decline was mainly due to the coronavirus crisis. During the first quarter, the company’s operations were affected by coronavirus-induced supply chain disruptions and inflationary pressures. Although improvements were noted in rental occupancies because of easing travel restrictions and quarantine requirements, the company stated complete recovery to take time. Uncertainty related to pandemic-induced implications remains a concern.
Marriott Vacations has been bearing the brunt of steep expenses for some time now. During the first quarter of 2022, total expenses in the quarter increased 23.3% year over year to $911 million from $739 million reported in the year-ago quarter. Escalated marketing and sales expenses along with management and exchange costs affected total costs. This and a rise in wage and gas costs added to the downside. Going forward, costs are likely to rise due to the coronavirus impact.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Civeo Corporation (CVEO - Free Report) , Bluegreen Vacations Holding Corporation and Funko, Inc. (FNKO - Free Report) .
Civeo sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have increased 77.7% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and earnings per share (EPS) suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.
Bluegreen Vacations carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has increased 46.6% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Funko carries a Zacks Rank #2. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have declined 6% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.