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Is Marriot Vacations (VAC) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Marriot Vacations Worldwide Corporation (VAC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Marriot Vacations has a trailing twelve months PE ratio of 19.55, as you can see in the chart below:
This level is somewhat favorable with the market at large, as the PE for the S&P 500 compares in at about 20.49. If we focus on the stock’s long-term PE trend, the current level puts Marriot Vacations’ current PE ratio below its midpoint over the past three years.
Further, the stock’s PE also compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Marriot Vacations has a forward PE ratio (price relative to this year’s earnings) of 17.91, so it is fair to say that a slightly more value-oriented path may be ahead for Marriot Vacations stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Marriot Vacations has a P/S ratio of about 1.42. This is considerably lower than the S&P 500 average, which comes in at 3.11 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Marriot Vacations currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Marriot Vacations a solid choice for value investors.
What About the Stock Overall?
Though Marriot Vacations might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives Marriot Vacations a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go higher in the past sixty days, compared to none lower, while the full year estimate has seen one upward revision and two downward revisions in the same time period.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has risen by 7.3% in the past two months, while the full year estimate has dipped about 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Marriot Vacations Worldwide Corporation Price and Consensus
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Marriot Vacations is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However with a sluggish industry rank (bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the Zacks Hotels & Motels sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Marriot Vacations (VAC) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Marriot Vacations Worldwide Corporation (VAC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Marriot Vacations has a trailing twelve months PE ratio of 19.55, as you can see in the chart below:
This level is somewhat favorable with the market at large, as the PE for the S&P 500 compares in at about 20.49. If we focus on the stock’s long-term PE trend, the current level puts Marriot Vacations’ current PE ratio below its midpoint over the past three years.
Further, the stock’s PE also compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Marriot Vacations has a forward PE ratio (price relative to this year’s earnings) of 17.91, so it is fair to say that a slightly more value-oriented path may be ahead for Marriot Vacations stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Marriot Vacations has a P/S ratio of about 1.42. This is considerably lower than the S&P 500 average, which comes in at 3.11 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Marriot Vacations currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Marriot Vacations a solid choice for value investors.
What About the Stock Overall?
Though Marriot Vacations might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives Marriot Vacations a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go higher in the past sixty days, compared to none lower, while the full year estimate has seen one upward revision and two downward revisions in the same time period.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has risen by 7.3% in the past two months, while the full year estimate has dipped about 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Marriot Vacations Worldwide Corporation Price and Consensus
Marriot Vacations Worldwide Corporation Price and Consensus | Marriot Vacations Worldwide Corporation Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Marriot Vacations is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However with a sluggish industry rank (bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the Zacks Hotels & Motels sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017? Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>