A month has gone by since the last earnings report for Marriott Vacations Worldwide (VAC Quick QuoteVAC - Free Report) . Shares have added about 1.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Marriott Vacations Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Marriott Vacations Q3 Earnings Beat, '24 Adjusted EBITDA View Rises

Marriott Vacations reported excellent third-quarter 2024 results, with both adjusted earnings and revenues beating the Zacks Consensus Estimate and increasing year over year.

The quarterly performance benefited from solid contributions from the Vacation Ownership segment, driven by increased tours, higher development, resort management and rental profit, partially offset by lower financing profit. Also, continued recovery from last year's Maui wildfires added to growth.

Although total expenses were higher in the quarter than the prior-year level, leverage from the increased top line aided the bottom line to a great extent.

Going forward, the company aims to focus on accelerating growth and strengthening profitability. It targets to achieve annual cost efficiencies between $50 million and $100 million in the next couple of years.

VAC’s Earnings & Revenue Discussion

Adjusted earnings per share (EPS) of $1.80 surpassed the Zacks Consensus Estimate of $1.53 by 17.7%. In the year-ago quarter, it reported an adjusted EPS of $1.20.

Quarterly revenues of $1.305 billion also surpassed the consensus mark of $1.268 billion by 2.9%. The top line increased 10% on a year-over-year basis.

Segmental Performances of Marriott Vacations

Vacation Ownership: The segment’s revenues totaled $1.25 billion, up from $1.126 billion reported in the prior-year quarter.

VAC’s Vacation Ownership total contract sales rose 5% year over year to $459 million.

The segment’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $231 million, up 33% from $173 million in the year-ago quarter. Adjusted EBITDA margin expanded 430 basis points (bps) year over year to 30.1%.

Exchange & Third-Party Management: Segmental revenues of $56 million declined year over year from $64 million. Revenues, excluding cost reimbursements, declined 10% year over year to $55 million.

Total active interval international members were down 2% year over year to 1.55 million. Average revenue per member declined 1% on a year-over-year basis to $38.93.

Adjusted EBITDA was $23 million, down 22% year over year. The segment’s adjusted EBITDA margin contracted 670 bps year over year to 43.1%.

VAC’s Corporate & Other Results

General and administrative expenses totaled $62 million, up year over year from $57 million.

Total expenses increased 7% year over year to $1.157 billion from $1.081 billion reported in the year-ago quarter.

Adjusted EBITDA amounted to $198 million, up 32% year over year from $150 million.

Balance Sheet of VAC

As of Sept. 30, Marriott Vacations’ cash and cash equivalents were $197 million compared with $248 million as of Dec. 31, 2023.

At the end of the third quarter, the company had $3 billion of corporate debt and $2.2 billion of non-recourse debt related to its securitized notes receivable.

Revised 2024 Outlook of Marriott Vacations

Management continues to anticipate contract sales to be in the range of $1.790-$1.825 billion compared with $1.772 billion in 2023.

Adjusted EBITDA is now expected to be between $700 million and $720 million, up from the prior expected range of $685-$715 million. This compares with $761 million reported in 2023.

Adjusted EPS is anticipated to be between $6.05 and $6.40 compared with the prior projection of $5.90-$6.45. This compares with adjusted EPS of $7.83 in 2023. Adjusted free cash flow is still projected to be in the range of $300-$340 million.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -17.5% due to these changes.

VGM Scores

Currently, Marriott Vacations Worldwide has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Performance of an Industry Player

Marriott Vacations Worldwide is part of the Zacks Leisure and Recreation Services industry. Over the past month, Royal Caribbean (RCL Quick QuoteRCL - Free Report) , a stock from the same industry, has gained 13.9%. The company reported its results for the quarter ended September 2024 more than a month ago.

Royal Caribbean reported revenues of $4.89 billion in the last reported quarter, representing a year-over-year change of +17.4%. EPS of $5.20 for the same period compares with $3.85 a year ago.

Royal Caribbean is expected to post earnings of $1.48 per share for the current quarter, representing a year-over-year change of +18.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Royal Caribbean. Also, the stock has a VGM Score of C.