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Can Marriott Vacations (VAC) Beat Q3 Earnings Estimates?

Marriott Vacations Worldwide CorporationVAC is set to report third-quarter 2015 results on Oct 15, before the opening bell.

Last quarter, the Florida-based vacation ownership company posted a positive earnings surprise of 1.11%. In fact, the company beat the earnings estimates in three out of the past four quarters, with an average positive earnings surprise of 8.23%.

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

Factors at Play

Marriott Vacations, one of the major players in the timeshare industry, is poised to benefit from positive industry trends driven by competitive advantages. In the first half of 2015, the company recorded higher contract sales and rental revenues. The trend is expected to continue in the third quarter as it has been able to maintain a steady flow of clients by offering tours to diverse locations and programs with greater outreach.

Volume per guest - sales volume for a given period divided by the number of groups toured - for Marriott Vacations has been increasing since the beginning of 2014. We expect the trend to continue in the to-be-reported quarter as well backed by strong marketing initiatives.

However, the overall timeshare industry is extensively marketing oriented and relies heavily on sales initiatives to attract customers. Therefore, the company's increased marketing expenses might impact third-quarter margins negatively.

Earnings Whispers

Our proven model does not conclusively show that Marriott Vacations is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP : Earnings ESP for Marriott Vacations is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 90 cents.

Zacks Rank : Marriott Vacations has a Zacks Rank #3 which when combined with 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Some stocks in the hotel industry that have both a positive Earnings ESP and a favorable Zacks Rank are:

Choice Hotels International Inc. CHH , with an Earnings ESP of +1.39% and a Zacks Rank #3.

Marriott International, Inc. MAR , with an Earnings ESP of +1.35% and a Zacks Rank #3.

Wyndham Worldwide Corporation WYN , with an Earnings ESP of +1.78% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

WYNDHAM WORLDWD (WYN): Free Stock Analysis Report

MARRIOTT INTL-A (MAR): Free Stock Analysis Report

CHOICE HTL INTL (CHH): Free Stock Analysis Report

MARRIOT VAC WW (VAC): 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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