MAR

Marriott International

134.68
USD
-2.89%
134.68
USD
-2.89%
127.23 195.90
52 weeks
52 weeks

Mkt Cap 45.17B

Shares Out 325.66M

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Bull Of The Day: Marriott International

Marriott International (MAR - Free Report) reported impressive Q1 2022 results last week, with earnings and revenues surpassing the Zacks Consensus Estimates. This is an important company to look at for two big reasons right now... 1) According to research from the World Travel & Tourism Council (WTTC) and Oxford Economics in February, its latest economic modeling projected that U.S. Travel & Tourism could rebound strongly this year, reaching almost $2 trillion in U.S. GDP contribution and exceeding pre-pandemic levels by 6.2%. Specifically, the report highlighted that U.S. domestic Travel & Tourism spending is forecast to reach more than $1.1 trillion for the year, surpassing pre-pandemic levels by 11.3%. Ironically, this $1.1T number is the value that was lost in 2020. 2) Despite raging inflation ravaging the stock market and threatening recession, this steady earner could be the safe harbor in a storm. Let's look at the fundamentals and make that determination. Marriott Quarter Discussion The bottom line outpaced the consensus mark for the seventh straight quarter, while the top-line beat the same for the fourth consecutive quarter. Following the results, the company’s shares are up 2.9% in the pre-market trading session. During the quarter, the company witnessed solid demand in the United States, Canada, the Middle East, and Africa region. Marriott benefited from robust leisure demand and improvements in business and cross-border travel. Although the Omicron variant had affected business transient demand in January, demand is stated to have picked up in March. With global trends improving, the company expects the recovery momentum to continue in the upcoming periods as well. At the end of Q1 2022, Marriott's development pipeline totaled nearly 2,878 hotels, with approximately 489,000 rooms. Nearly 201,400 rooms were under construction. Impressively, during the quarter the company added 75 new properties (11,799 rooms) to its worldwide lodging portfolio. Earnings & Revenue Details In the quarter under review, Marriott’s adjusted earnings per share (EPS) were $1.25, surpassing the Zacks Consensus Estimate of 95 cents. In the prior-year quarter, the company had reported adjusted earnings of 10 cents per share Quarterly revenues of $4,199 million surpassed the consensus mark of $4,172 million. The top line surged 81.3% on a year-over-year basis. During the quarter, revenues from Base management and Franchise fee came in at $213 million and $500 million compared with $106 million and $306 million reported in the prior-year quarter. RevPAR & Margins In the quarter under review, RevPAR for worldwide comparable system-wide properties fell 19.4% (in constant dollars) compared with 2019 levels. The downside was primarily driven by a fall in occupancy (13.6% from 2019 levels). However, the average daily rate (ADR) increased 0.8% from 2019 levels. RevPAR, or revenue per available room, is a performance metric in the hotel industry that is calculated by dividing a hotel's total guestroom revenue by the room count and the number of days in the period being measured. Comparable system-wide RevPAR in Asia Pacific (excluding China) fell 48.4% (in constant dollars) from 2019 levels. Occupancy and ADR declined 26.1% and 18.6%, respectively, from 2019 levels. Comparable system-wide RevPAR in Greater China fell 41.9% from 2019 levels. On a constant-dollar basis, international comparable system-wide RevPAR fell 31.7% compared with 2019 levels. Occupancy and ADR declined 19.8% and 2.4%, respectively, from 2019 levels. Comparable system-wide RevPAR in Europe and the Caribbean & Latin America declined 37.9% and 13.5%, respectively, from 2019 levels. Total expenses during the quarter increased 63.1% year over year to $ 3,641 million, primarily owing to a rise in Reimbursed expenses. During the first quarter, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to $759 million compared with $296 million reported in the prior-year quarter. After this strong report card and outlook, analyst consensus numbers climbed on the top and bottom lines with revenues for this year projected to hit nearly $20 billion, representing 43% annual growth. And EPS launched up to $5.90, for an 85% expected to advance. Stagflation Spiral? Given these strong numbers and a stock trading at a discount to its fundamental value, I think the case can be made for buying MAR near $160. The bottom line on Marriott Consumers are itching to catch a flight to just about anywhere and, while the current downdraft in stock market wealth may trim some appetites, the forecast for a surge in travel & tourism that exceeds 2019 is probably well intact. MAR is a good way to play it from these levels.

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