Marriott Pumps Up Buyback Activity - Analyst Blog

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Marriott International Inc. ( MAR ) recently approved a $35 million extension of its stock repurchase program, thereby maintaining the trend of returning wealth to its shareholders from time to time, depending on market conditions. This program authorizes the company to repurchase up to $40 million of its common stock.

Looking back, the company repurchased 43.4 million shares for $1.4 billion in 2011. Management expects to generate meaningful amounts of free cash flow, going forward. In the past 4 years, Marriott has reduced fully diluted shares outstanding by nearly 10% by deploying excess cash flow to repurchase 62 million shares. In 2012, Marriott anticipates to have an added $500 million to $1 billion of cash available for share repurchase or opportunistic investing, including acquisitions or repositioning of hotels. As a matter of fact, management expects investment activities in 2012 to increase from last year.

We believe this is a positive step toward returning shareholder wealth. The increase in share buyback authorization also affirms the company's confidence in its fundamentals. At the same time, buying back shares will help the company in reducing the share count, thereby increasing earnings per share and return on equity.

As of February 10, 2012, the shares of Marriott were trading at $35.72. The stock had historically traded between $25.49 and $42.78 in the last 12 months. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.

Apart from buyback activity, Marriott's board of directors declared a quarterly cash dividend of 10 cents per share of common stock payable March 30, 2012 to shareholders of record on February 24.

Marriott, which competes with the likes of Starwood Hotels & Resorts Worldwide Inc. ( HOT ) and Wyndham Worldwide Corp. ( WYN ), currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.


 
STARWOOD HOTELS ( HOT ): Free Stock Analysis Report
 
MARRIOTT INTL-A ( MAR ): Free Stock Analysis Report
 
WYNDHAM WORLDWD ( WYN ): Free Stock Analysis Report
 
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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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HOT , MAR , WYN

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