Why Is Marriott Vacations Worldwide (VAC) Up 5.7% Since Last Earnings Report?

It has been about a month since the last earnings report for Marriott Vacations Worldwide (VAC). Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Marriott Vacations Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Marriott Vacations Q4 Earnings & Revenues Beat Estimates

Marriott Vacations reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate after missing in the preceding quarter. The top line increased on a year-over-year basis, but the bottom line declined.

Earnings & Revenue Discussion

During fourth-quarter 2023, Marriott Vacations reported adjusted earnings per share (EPS) of $1.88, surpassing the Zacks Consensus Estimate of $1.80 by 4.4%. In the year-ago quarter, it reported an adjusted EPS of $2.74.

Quarterly revenues of $1,194 million topped the consensus mark of $1,146 million by 4.2%. The top line inched up 0.5% on a year-over-year basis.

Segmental Performances

Vacation Ownership: During the fourth quarter, the segment’s revenues totaled $1,133 million, up 1.8% from $1,113 million reported in the prior-year quarter.

During the quarter, the company’s Vacation Ownership contract sales fell 2% year over year to $447 million. The downside was primarily caused by a 2% decline in VPG, a 0.3% decline in tours and a $24 million prior-year reportability benefit. This and the impact of the Maui wildfires added to the downside.

The segment’s adjusted EBITDA during the quarter came in at $261 million, up 2.8% from $254 million reported in the prior-year quarter.

Exchange & Third-Party Management: The segment’s revenues of $62 million are in line with the year-ago reported figure. Revenues, excluding cost reimbursements, declined 2% year over year.

During the fourth quarter, the interval of international active members remained in line with the year-ago figure at 1.6 million. Average revenues per member inched up 2% on a year-over-year basis. Adjusted EBITDA was $30 million, down 3.2% year over year.

Corporate and Other Results

During the fourth quarter, general and administrative costs totaled $84 million, down 8% year over year. Our estimate for the metric was $53.8 million.

Expenses & EBITDA

During the quarter, total expenses increased 10.1% year over year to $1,092 million from $992 million reported in the year-ago quarter. Our estimate for the metric was $991 million.

Adjusted EBITDA amounted to $186 million compared with $239 million reported in the prior-year quarter. The company anticipates a $24 million negative impact on Adjusted EBITDA from the Maui wildfires.

Balance Sheet

As of Dec 31, 2023, the company’s cash and cash equivalents were $248 million compared with $524 million as of Dec 31, 2022.

At the end of the fourth quarter, the company had $3 billion of corporate debt and $2.1 billion of non-recourse debt related to its securitized notes receivable.

2023 Highlights

Total revenues in 2023 amounted to $4,727 million compared with $4,656 million in 2022. Adjusted EBITDA totaled $761 million compared with $966 million a year ago. Adjusted EPS came in at $7.83 compared with $10.26 reported in the previous year.

2024 Outlook

For 2024, the company anticipates contract sales in the range of $1,880-$1,930 million compared with $1,772 million in 2023. Adjusted free cash flow is projected in the range of $400-$450 million. Adjusted EBITDA is expected to be between $760 million and $800 million compared with $761 million in the prior year. Adjusted fully diluted EPS for 2024 are expected to be between $7.65 and $8.35.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -17.28% due to these changes.

VGM Scores

Currently, Marriott Vacations Worldwide has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marriott Vacations Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Marriott Vacations Worldwide is part of the Zacks Leisure and Recreation Services industry. Over the past month, Caesars Entertainment (CZR), a stock from the same industry, has gained 0.4%. The company reported its results for the quarter ended December 2023 more than a month ago.

Caesars Entertainment reported revenues of $2.83 billion in the last reported quarter, representing a year-over-year change of +0.1%. EPS of -$0.34 for the same period compares with -$0.11 a year ago.

Caesars Entertainment is expected to post earnings of $0.05 per share for the current quarter, representing a year-over-year change of -44.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -77.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Caesars Entertainment. Also, the stock has a VGM Score of B.

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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.

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