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Marriott (MAR) Up 5.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Marriott International (MAR - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marriott due for a pullback? 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 reported mixed second-quarter 2024 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and top lines increased on a year-over-year basis.
The quarterly results benefited from a solid increase in global travel demand, reflecting worldwide revenue per available room (RevPAR) growth. International RevPAR gained from solid contributions from Asia Pacific, excluding China, while U.S. & Canada RevPAR benefited from growth across all customer segments, reflecting average daily rate (“ADR”) and occupancy uptrend.
The uptrend was also backed by net room growth, asset-light business model, enhancements in the Marriott Bonvoy loyalty program and the Starbucks collaboration announced in June 2024.
Earnings & Revenue Discussion
Marriott’s adjusted EPS of $2.50 topped the Zacks Consensus Estimate of $2.49 by 0.4%. It reported adjusted earnings of $2.26 per share in the prior-year quarter.
Quarterly revenues of $6.44 billion missed the consensus mark of $6.5 billion by 0.9%. The top line moved up 6% on a year-over-year basis. Revenues from Base management and Franchise fees were $330 million and $818 million, up 4% and 11% year over year, respectively. Increased RevPAR and unit growth primarily backed this uptick. We estimated the metrics to be $339.7 million and $812.2 million, respectively. Incentive management fees were $195 million, reflecting a rise of 1% from $193 million reported in the prior-year quarter.
RevPAR & Margins
RevPAR for worldwide comparable system-wide properties rose 4.9% (in constant dollars) year over year. The upside was primarily backed by a 2.6% increase in ADR and a 1.6% increase in occupancy, year over year.
Comparable system-wide RevPAR in the Asia Pacific (excluding China) increased 13% (in constant dollars) year over year. Occupancy moved up 4.3% year over year while ADR rose 6.2% from the 2023 level. Comparable system-wide RevPAR in Greater China declined 4.2% year over year. On a constant-dollar basis, international comparable system-wide RevPAR increased 7.4% year over year. Occupancy and ADR gained 2.6% and 3.4% year over year, respectively. Comparable system-wide RevPAR in Europe gained 6.6% year over year. RevPAR in the Caribbean & Latin America and Middle East & Africa rose 8.6% and 18.1%, respectively from 2023 levels.
Total expenses increased 5.3% year over year to $5.24 billion, primarily owing to a rise in reimbursed expenses. Our estimate was pegged at $5.2 billion. Adjusted EBITDA amounted to $1.32 billion, up 9% from the prior-year quarter. We predicted the metric to be $1.3 billion.
Balance Sheet
At the second-quarter end, Marriott's total debt totaled $13.1 billion, up year over year from $11.9 billion and sequentially from $12.7 billion. Cash and cash equivalents, as of Jun 29, 2024, were $0.3 billion compared with $0.4 billion in the previous quarter. Year to date (through Jul 29), the company repurchased 10.4 million shares worth $2.5 billion.
Unit Developments
At the end of the second quarter, Marriott's worldwide development pipeline totaled 3,509 hotels, with more than 559,000 rooms. As of the quarter's end, about 1,127 properties with more than 209,000 rooms were under construction.
Q3 & 2024 Outlook
For the third quarter, management anticipates gross fee revenues in the range of $1.28-$1.29 billion. Adjusted EBITDA is expected between $1.23 billion and $1.25 billion. MAR estimates third-quarter EPS to be between $2.27 and $2.33. The company projects worldwide system-wide RevPAR to increase 3-4% year over year.
For 2024, Marriott reduced its gross fee revenue expectations to $5.13-$5.18 billion from the prior expected range of $5.18-$5.28 billion. General and administrative expenses are now projected in the range of $1.02-$1.03 billion (priorly expected between $1.02 billion and $1.04 billion). Adjusted EBITDA is now expected between $4.95 billion and $5.2 billion compared with the previous expectation of $4.96-$5.1 billion. The company now envisions 2024 EPS in the band of $9.23-$9.40, down from the prior expectation of $9.31-$9.65.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Marriott has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 C. 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 has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Marriott (MAR) Up 5.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Marriott International (MAR - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marriott due for a pullback? 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 Q2 Earnings Top, Revenues Miss, '24 View Cut
Marriott reported mixed second-quarter 2024 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and top lines increased on a year-over-year basis.
The quarterly results benefited from a solid increase in global travel demand, reflecting worldwide revenue per available room (RevPAR) growth. International RevPAR gained from solid contributions from Asia Pacific, excluding China, while U.S. & Canada RevPAR benefited from growth across all customer segments, reflecting average daily rate (“ADR”) and occupancy uptrend.
The uptrend was also backed by net room growth, asset-light business model, enhancements in the Marriott Bonvoy loyalty program and the Starbucks collaboration announced in June 2024.
Earnings & Revenue Discussion
Marriott’s adjusted EPS of $2.50 topped the Zacks Consensus Estimate of $2.49 by 0.4%. It reported adjusted earnings of $2.26 per share in the prior-year quarter.
Quarterly revenues of $6.44 billion missed the consensus mark of $6.5 billion by 0.9%. The top line moved up 6% on a year-over-year basis. Revenues from Base management and Franchise fees were $330 million and $818 million, up 4% and 11% year over year, respectively. Increased RevPAR and unit growth primarily backed this uptick. We estimated the metrics to be $339.7 million and $812.2 million, respectively. Incentive management fees were $195 million, reflecting a rise of 1% from $193 million reported in the prior-year quarter.
RevPAR & Margins
RevPAR for worldwide comparable system-wide properties rose 4.9% (in constant dollars) year over year. The upside was primarily backed by a 2.6% increase in ADR and a 1.6% increase in occupancy, year over year.
Comparable system-wide RevPAR in the Asia Pacific (excluding China) increased 13% (in constant dollars) year over year. Occupancy moved up 4.3% year over year while ADR rose 6.2% from the 2023 level. Comparable system-wide RevPAR in Greater China declined 4.2% year over year. On a constant-dollar basis, international comparable system-wide RevPAR increased 7.4% year over year. Occupancy and ADR gained 2.6% and 3.4% year over year, respectively. Comparable system-wide RevPAR in Europe gained 6.6% year over year. RevPAR in the Caribbean & Latin America and Middle East & Africa rose 8.6% and 18.1%, respectively from 2023 levels.
Total expenses increased 5.3% year over year to $5.24 billion, primarily owing to a rise in reimbursed expenses. Our estimate was pegged at $5.2 billion. Adjusted EBITDA amounted to $1.32 billion, up 9% from the prior-year quarter. We predicted the metric to be $1.3 billion.
Balance Sheet
At the second-quarter end, Marriott's total debt totaled $13.1 billion, up year over year from $11.9 billion and sequentially from $12.7 billion. Cash and cash equivalents, as of Jun 29, 2024, were $0.3 billion compared with $0.4 billion in the previous quarter. Year to date (through Jul 29), the company repurchased 10.4 million shares worth $2.5 billion.
Unit Developments
At the end of the second quarter, Marriott's worldwide development pipeline totaled 3,509 hotels, with more than 559,000 rooms. As of the quarter's end, about 1,127 properties with more than 209,000 rooms were under construction.
Q3 & 2024 Outlook
For the third quarter, management anticipates gross fee revenues in the range of $1.28-$1.29 billion. Adjusted EBITDA is expected between $1.23 billion and $1.25 billion. MAR estimates third-quarter EPS to be between $2.27 and $2.33. The company projects worldwide system-wide RevPAR to increase 3-4% year over year.
For 2024, Marriott reduced its gross fee revenue expectations to $5.13-$5.18 billion from the prior expected range of $5.18-$5.28 billion. General and administrative expenses are now projected in the range of $1.02-$1.03 billion (priorly expected between $1.02 billion and $1.04 billion). Adjusted EBITDA is now expected between $4.95 billion and $5.2 billion compared with the previous expectation of $4.96-$5.1 billion. The company now envisions 2024 EPS in the band of $9.23-$9.40, down from the prior expectation of $9.31-$9.65.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Marriott has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 C. 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 has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.