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Hurricane Dorian Likely to Hurt Marriott Vacations' Q3 Results

Zacks Equity Research

Marriott Vacations Worldwide Corporation VAC issued an update on the anticipated impact of Hurricane Dorian on its operations. The company further stated that all of the resorts that were impacted by the hurricane were re-opened.

Hurricane Dorian had minimal impact on the company’s resorts and sales centers. However, shutting down of resorts and sales center at different locations, flight disruptions as well as cancellation of reservations have hurt Marriott Vacations’ sales.

In the third quarter of 2019, the company anticipates contract sales to be negatively impacted by nearly $6-$8 million. Adjusted EBITDA in the same quarter is also expected to be affected by roughly $3-$5 million. The company’s Vacation Ownership rental and ancillary operations, and its Exchange and Third-Party Management business are also likely to be hurt.

However, the company’s top-line growth is likely to continue despite the impact of Hurricane Dorian. In second-quarter 2019, its revenues increased 79.5%, following an 85.6% gain in the preceding quarter. The upside can be attributed to revenue growth across Marriott Vacations’ segments. Also, consolidated Vacation Ownership contract sales, rental, financing, and resort management and other services’ revenues grew 66%, 90.5%, 91.7% and 71.8%, respectively, in the quarter. Strong revenue-building capacities, digital innovations and synergies from ILG acquisition too bode well.

These apart, Marriott Vacations has been focusing on digital expansion and innovation of latest techniques. The company has been remodeling the business framework. It turned into a more point-based and capital-efficient system, with less dependence on the securitization market. In the past three months, shares of Marriott Vacations have surged 10.7% against  the industry’s 5.6% decline.

Zacks Rank & A Key Pick

Marriott Vacations, which shares space with Choice Hotels International, Inc. CHH and InterContinental Hotels Group PLC IHG, has a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the same space is Wyndham Destinations, Inc. WYND, carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wyndham Destinations reported better-than-expected earnings in each of the trailing four quarters, the average being 6.5%.

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Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report
Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
Intercontinental Hotels Group (IHG) : Free Stock Analysis Report
WYNDHAM DESTINATIONS, INC. (WYND) : Free Stock Analysis Report
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