Marriott Vacations Worldwide Corp. ( VAC ) posted mixed fourth-quarter 2014 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of 67 cents per share beat the Zacks Consensus Estimate of 61 cents by 9.8%, due to solid North American results. Further, it increased substantially year over year.
This vacation ownership company's shares declined 1.8% in the trading session on Feb 26 in response to the results.
This timeshare company posted net revenue of $511 million, missing the Zacks Consensus Estimate of $536 million by 4.6%. Moreover, revenue decreased 2.9% year over year owing to lower residential contract sales in its North America segment.
Behind the Headline Numbers
Total company contract sales were $215 million, up 1% year over year driven by higher vacation ownership contract sales in the company's North America segment, partially offset by lower residential contract sales in the same division.
Rental revenues were $73 million, an improvement of 5.8% from the year-ago quarter, mainly attributable to an increase in transient rate. Rental revenues, net of expenses, were $1 million, as against negative revenues of $13 million in the third quarter of 2013.
Resort management and other services revenues were $89 million, in line with the third quarter of 2013. Resort management and other services revenues, net of expenses, were $31 million, a rise of 18% from the year-ago quarter.
Adjusted development margin decreased 150 basis points (bps) year over year to 21.4% in the quarter. Company development margin declined 150 bps year over year to 21.4% in the fourth quarter of 2014, whereas North America development margin decreased 190 bps year over year to 23.5%.
North America VPG increased 4.9% year over year to $3,255 in the fourth quarter of 2014, driven mainly by an increase in the average number of points purchased per contract and higher pricing. North American vacation ownership contract sales were $186 million in the quarter, increasing 4% year over year.
Asia Pacific contract sales decreased 7.7% year over year to $12 million.
Contract sales remained stable year over year at $14 million.
For 2014, earnings were $2.93, up 26.8% year over year. Total revenues were $1.74, up 0.4% year over year.
2015 Earnings Guidance
Adjusted earnings per share are estimated to be in the range of $3.16 to $3.35 in 2015, and company contract sales growth (excluding residential) are expected to grow 4-7% on a year-over-year basis. Adjusted company development margin is expected to be between 21-22%. Adjusted EBITDA is expected to be in the band of $215 million to $225 million.
Other Stocks to Consider
Marriott Vacations presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the hotel industry include Intercontinental Hotels Group plc ( IHG ) and Wyndham Worldwide Corp. ( WYN ). Both these stocks carry a Zacks Rank #2 (Buy). A better ranked stock in the broader consumer discretionary sector is Dave & Buster's Entertainment, Inc. ( PLAY ) with a Zacks Rank #1 (Strong Buy).
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