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What to Expect from Marriott Vacations (VAC) in Q1 Earnings?

Zacks Equity Research

Marriott Vacations Worldwide Corp. VAC is scheduled to report first-quarter 2017 numbers on May 4, before the opening bell.

Last quarter, this Florida-based vacation ownership company posted a positive earnings surprise of 3.98%. However, the company has lagged earnings estimates in two of the past four quarters, with an average miss of 5.60%.

Marriot Vacations Worldwide Corporation Price and EPS Surprise

 

Marriot Vacations Worldwide Corporation Price and EPS Surprise | Marriot Vacations Worldwide Corporation Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Marriott Vacations, one of the major players in the timeshare industry, is poised to benefit from positive timeshare industry trends. The company has been able to maintain a steady flow of clients by offering tours to diverse locations and programs with greater outreach.

Marriott Vacations expects to drive contract sales and rental revenues in the first quarter via its two major growth initiatives. The first being tours from marketing programs, namely call transfer and universal encore programs and secondly, by additional sales distributions at its new locations. In fact, in the fourth quarter conference call, the company noted that their Volume per Guest (VPG) for the current period was solid and their tour activations were well ahead of the same point in 2016.

Nevertheless, as the timeshare industry is extensively marketing-oriented and relies heavily on sales initiatives to attract customers, the company’s increased marketing expenses might pressurize the first quarter margins.

Earnings Whispers

Our proven model does not conclusively show earnings beat for Marriott Vacations this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Marriott Vacations has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.18 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Marriott Vacations carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks to Consider

Here are some hotel companies that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Playa Hotels & Resorts N.V. PLYA has an Earnings ESP of +9.68% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Lion Hotels Corporation RLH has an Earnings ESP of +3.33% and a Zacks Rank #3.

Marriott International, Inc. MAR has an Earnings ESP of +1.11% and a Zacks Rank #3.

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