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Why Is Marriott (VAC) Down 4.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC). Shares have lost about 4.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Marriott due for a breakout? 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 catalysts.

Marriott Vacations Q2 Earnings Top Estimates, Rise Y/Y

Marriott Vacations reported impressive second-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis.

The company’s CEO, Stephen P. Weisz, stated, “We introduced Abound by Marriott Vacations during the quarter, an exclusive new program providing more options and access for Owners. With the strong recovery of our operations, as well as cash proceeds from dispositions, we accelerated our return of cash to shareholders, surpassing $500 million this year through the end of July.”

Earnings & Revenues Discussion

During second-quarter 2022, the company reported adjusted earnings per share (EPS) of $2.87, surpassing the Zacks Consensus Estimate of $2.28 by 25.9%. In the year-ago quarter, the company had reported adjusted earnings of 85 cents per share.

Quarterly revenues of $1,164 million beat the consensus mark of $1,155 million. The top line increased 18.9% on a year-over-year basis.

Segmental Performances

Vacation Ownership: During the second quarter, revenues in the segment totaled $1,091 million, up 23.6% from $883 million reported in the prior-year quarter. Revenues, excluding cost reimbursements, increased 28% year over year.

The segment’s adjusted EBITDA came in at $274 million, up 51% year-over-year.

Exchange & Third-Party Management: The segment’s revenues totaled $74 million in the second quarter, down 14% from $86 million reported in the prior-year quarter. Revenues, excluding cost reimbursements, decreased 4% year over year.

During the second quarter, interval international active members increased 21% year over year to 1.6 million, while average revenues per member declined 16% on a year-over-year basis. The segment’s adjusted EBITDA came in at $35 million compared with $37 million reported in the prior-year quarter.

Corporate and Other Results

During the second quarter, general and administrative costs decreased by $2 million year over year, owing to lower bonus expenses.

Expenses & EBITDA

Total expenses in the quarter increased 10% year over year to $957 million from $870 million reported in the year-ago quarter.

The company’s adjusted EBITDA in the second quarter amounted to $255 million compared with $164 million reported in the year-ago quarter.

Balance Sheet

As of Jun 30, 2022, the company’s cash and cash equivalents were $324 million compared with $342 million as of Dec 31, 2021.

At the end of the second quarter, the company had $2.7 billion of net corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

2022 Outlook

For 2022, the company anticipates contract sales in the range of $1,775-$1,875 million compared with the prior estimate of $1,675-$1,775 million. Adjusted free cash flow is projected in the range of $650-$730 million, up from the earlier estimate of $560-$640 million. Adjusted EBITDA is expected to be between $880 million and $930 million, up from the prior estimate of $860-$920 million. Adjusted fully diluted EPS for 2022 is expected to be between $9.47 and $10.35 compared with the prior estimate of $9.13-$10.09 per share.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Marriott has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Marriott has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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