Marriott Vacations Worldwide Corporation
) raised its adjusted earnings per share outlook for 2012 during
its third-quarter report, which helped this timeshare company hit a
52-week high of $41.73 on October 18 and become a Zacks #1 Rank
(Strong Buy) on October 23.
On October 18, Marriott Vacations Worldwide posted adjusted net
income of $8 million for the third quarter; up $5 million from Last
year. However, adjusted earnings of 23 cents per share fell short
of the Zacks Consensus Estimate.
Total revenue inched up 1.3% to $383 million, benefiting from
higher rental revenues, resort management and other services
revenues and cost reimbursements. The North America segment
continued its strong performance with contract sales up 13% and
volume per guest up 19%.
The adjusted development margin expanded 11.9% to 20.9% as a result
of a 14.5% increase in North America adjusted development margin.
Adjusted EBITDA was $33 million, up 106.3%.
The organizational and separation plan related to the company's
spin-off from Marriott International, Inc. (
) is expected to drive $15 million to $20 million of annualized
savings by 2014.
Based on the strength in its North America segment, management
raised its adjusted earnings per share outlook for 2012 to between
$1.17 and $1.31 from the prior projection of $1.03 to $1.17.
Adjusted EBITDA guidance was also raised to between $130 million
and $140 million from $115 million to $125 million.
Rising Earnings Estimate Revisions
Over the last 30 days, three out of 4 estimates have been revised
upward for both 2012 and 2013. The Zacks Consensus Estimate for
this year is up 10.4% to $1.27, while the Zacks Consensus Estimate
for next year has climbed 17.0% to $1.79.
These outlooks suggest year-over-year growth of 114.8% for 2012 and
roughly 41.4% for 2013.
The valuation for Marriott Vacations Worldwide looks compelling
compared with its peers by most metrics. On a price-to-book (P/B)
basis, shares trade at 1.19x, a discount to the peer group average
of 1.96x. Also, the company has a price-to-sales (P/S) ratio of
0.84, a 46.2% discount to the peer group average of 1.56. Moreover,
the company's long-term estimated earnings per share growth rate
remains strong at 30.0%.
Chart Shows Growth Potential
Since July 25, shares of Marriott Vacations Worldwide have
consistently fared better than the simple moving average for 50
days. Moreover, the stock has always been trading above its 200 day
moving average. The continuous uptrend in stock prices, as mirrored
in the following chart, offers an enticing upside potential going
Volume is fairly strong, averaging 312K daily. The year-to-date
return for the stock is a robust 134.62%, which is substantially
higher than the S&P 500's 12.08%.
Based in Orlando, Marriott Vacations Worldwide spun-off from
Marriott International in late 2011. Marriott Vacations is a
developer, marketer, seller and manager of vacation ownership
resorts and vacation club, destination club and exchange programs,
principally under the Marriott and Ritz-Carlton brands and
trademarks. The company has three segments: North America, Luxury
and Europe, and Asia-Pacific.
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