Can Marriott (MAR) Keep Its Earnings Streak Alive in Q4?

We expect Marriott International, Inc.MAR to beat expectations when it reports fourth-quarter and full-year 2016 numbers on Feb 15, after market close.

In Sep 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide Inc., and became the world's largest hotel company.

Last quarter, Marriott posted a positive earnings surprise of 1.11%. In fact, the company's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.78%.

Marriott International Price and EPS Surprise

Marriott International Price and EPS Surprise | Marriott International Quote

Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Marriott is likely to beat on earnings because it has the perfect combination of the two key ingredients.

Zacks ESP : Earnings ESP for Marriott is +2.41% because the Most Accurate estimate is pegged at 85 cents, while the Zacks Consensus Estimate stands at 83 cents. A favorable Zacks ESP serves as a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Marriott currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Marriott's favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat.

What's Driving the Better-than-Expected Earnings?

Marriott's earnings have been surpassing the Zacks Consensus Estimate consistently over the past few quarters on the back of solid revenue per available room (RevPAR) growth as well as strong margins. We expect the trend to continue in the to-be-reported quarter as well.

Marriott's increased scale and a robust development pipeline post Starwood purchase bodes well. Increasing business and leisure travel on the back of an improving economy and positive employment numbers along with higher transaction volumes should further boost the quarter's results. Additionally, the company's investments in technology for hotel bookings would improve guest experience, which in turn is expected to boost occupancy in the fourth quarter.

For the fourth quarter, earnings per share are estimated between 80 cents and 85 cents. Meanwhile, comparable system-wide RevPAR is expected to be flat to up 1% on a constant dollar basis, in North America and worldwide. Outside North America, the company expects the same to be roughly flat.

However, lingering global uncertainty in some key operating regions is likely to limit revenue growth. Also, soft demand in the oil producing regions and heightened competition in the domestic market might mar fourth-quarter RevPAR. Additionally, the company has been witnessing fewer international guests at its U.S. hotels over the past few quarters, given the stronger dollar. This may further hurt revenues and profits in the to-be-reported quarter.

Stocks to Consider

Marriott is not the only company looking up this earnings season. Here are some other hotel companies to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Extended Stay America, Inc. STAY has an Earnings ESP of +21.43% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Hyatt Hotels Corp. H has an Earnings ESP of +12.50% and a Zacks Rank #3.

Wyndham Worldwide Corp. WYN has an Earnings ESP of +2.31% and a Zacks Rank #3.

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Wyndham Worldwide Corp (WYN): Free Stock Analysis Report

Marriott International (MAR): Free Stock Analysis Report

Hyatt Hotels Corporation (H): Free Stock Analysis Report

Extended Stay America, Inc. (STAY): 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 Nasdaq, Inc.

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

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