It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC Quick QuoteVAC - Free Report) . Shares have lost about 4.7% 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 Vacations Worldwide 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 drivers.

Marriott Vacations Q1 Earnings & Revenues Beat Estimates

Marriott Vacations reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.

VAC’s president & chief executive officer, John Geller, stated, “Consumers continue to prioritize travel, which we’re seeing in our occupancies, Abound by Marriott Vacations is generating excitement among our existing owners and first time buyers, and we are making investments in our business to support our long term growth.”

Earnings & Revenue Discussion

During first-quarter 2023, Marriott Vacations reported adjusted earnings per share (EPS) of $2.54, beating the Zacks Consensus Estimate of $1.84 by 38%. In the year-ago quarter, it reported adjusted earnings of $1.70.

Quarterly revenues of $1,169 million surpassed the consensus mark of $1,127 million and increased 11.1% on a year-over-year basis.

Segmental Performances

Vacation Ownership: Revenues from this segment totaled $1,097 million, up 14.7% from $956 million reported in the prior-year quarter.

Adjusted EBITDA was $229 million, up 15.1% year over year.

Exchange & Third-Party Management: The segment’s revenues of $71 million declined 15.5% from $84 million reported in the year-ago quarter. Revenues, excluding cost reimbursements, decreased 12% year over year.

During first-quarter 2023, interval international active members decreased 2% year over year to 1.6 million. Average revenues per member declined 5% on a year-over-year basis. Adjusted EBITDA was $37 million, down 13% year over year.

Corporate and Other Results

General and administrative costs totaled $68 million compared with $61 million in the prior-year quarter.

Expenses & EBITDA

Total expenses increased 11.4% year over year to $1,015 million from $987 million reported in the year-ago quarter.

Adjusted EBITDA amounted to $203 million compared with $188 million reported in the prior-year quarter.

Balance Sheet

As of Mar 31, Marriott Vacations’s cash and cash equivalents were $306 million compared with $524 million as of Dec 31, 2022.

At the end of the first quarter, the company had $3.1 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

2023 Outlook

For 2023, management anticipates contract sales in the range of $1,930-$2,000 million. Adjusted free cash flow is projected in the range of $600-$670 million. Adjusted EBITDA is estimated to be between $950 million and $1,000 million.

Adjusted EPS is expected to be between $11.05 and $11.85, up from the prior estimate of $10.75 and $11.54.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -12.45% due to these changes.

VGM Scores

At this time, Marriott Vacations Worldwide has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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