March 5, 2024

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Marriott Vacations’ (VAC) Q4 Earnings Lag Estimates, Stock Down

Marriott Vacations’ (VAC) Q4 Earnings Lag Estimates, Stock Down

Marriott Vacations Worldwide Corporation VAC reported fourth-quarter 2022 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding three quarters. Following the results, the company’s shares declined 3.6% in the after-hour trading session on Feb 22.

The company’s president & chief executive officer, John Geller, stated, “Looking forward, we expect occupancies in North America and Europe to remain strong this year and for Asia-Pacific to continue to improve. We also expect to grow contract sales this year by 5% to 9% compared to the prior year and for Adjusted Free Cash Flow to be between $600 million and $670 million, illustrating the continued demand for leisure travel and the strength of our business model.”

Earnings & Revenue Discussion

During the fourth quarter of 2022, the company reported adjusted earnings per share (EPS) of $2.74, missing the Zacks Consensus Estimate of $2.85 by 3.9%. In the year-ago quarter, the company had reported adjusted earnings of $2.38 per share.

Quarterly revenues of $1,188 million lagged the consensus mark of $1,228 million. However, the top line increased 8% on a year-over-year basis.

Marriot Vacations Worldwide Corporation Price, Consensus and EPS Surprise Marriot Vacations Worldwide Corporation Price, Consensus and EPS Surprise

Marriot Vacations Worldwide Corporation price-consensus-eps-surprise-chart | Marriot Vacations Worldwide Corporation Quote

Segmental Performances

Vacation Ownership: During the fourth quarter, revenues in the segment totaled $1,113 million, up 9% from $1,021 million reported in the prior-year quarter.

The segment’s adjusted EBITDA came in at $254 million, up 8% year over year.

Exchange & Third-Party Management: The segment’s revenues totaled $62 million in the fourth quarter, down 12.7% from $71 million reported in the prior-year quarter. Revenues, excluding cost reimbursements, decreased 7% year over year.

During the fourth quarter, interval international active members increased 21% year over year to 1.6 million, while average revenues per member declined 17% on a year-over-year basis. The segment’s adjusted EBITDA came in at $31 million, flat year over year.

Corporate and Other Results

During the fourth quarter, general and administrative costs came in at $53 million, compared with $46 million in the prior-year quarter.

Expenses & EBITDA

Total expenses in the quarter increased 0.5% year over year to $992 million from $987 million reported in the year-ago quarter.

The company’s adjusted EBITDA in the fourth quarter amounted to $239 million compared with $219 million reported in the year-ago quarter.

Balance Sheet

As of Dec 31, 2022, the company’s cash and cash equivalents were $524 million compared with $342 million as of Dec 31, 2021.

At the end of the fourth quarter, the company had $2.8 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

2023 Outlook

For 2023, the company anticipates contract sales in the range of $1,930-$2,000 million. Adjusted free cash flow is projected in the range of $600-$670 million. Adjusted EBITDA is expected to be between $950 million and $1,000 million. Adjusted fully diluted EPS for 2023 is expected to be between $10.75 and $11.54.

Zacks Rank & Key Picks

Marriott Vacations carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited. OSW, Las Vegas Sands Corp. LVS and Playa Hotels & Resorts N.V. PLYA.

OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 3.3% in the past year.

The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.

Las Vegas Sands sports a Zacks Rank #1. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 31.6% in the past year. 

The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 100.8% and 217.5%, respectively, from the year-ago period’s estimated levels. 

Playa Hotels carries a Zacks Rank #2 (Buy). PLYA has a trailing four-quarter earnings surprise of 19.4%, on average. Shares of the company have declined 3.4% in the past year. 

The Zacks Consensus Estimate for PLYA’s 2023 sales and EPS indicates a rise of 7.9% and 26.3%, respectively, from the year-ago levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.