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Factors Setting The Tone For Marriott's (MAR) Q2 Earnings

By Zacks Investment ResearchStock MarketsJul 29, 2019 10:24PM ET
Factors Setting The Tone For Marriott's (MAR) Q2 Earnings
By Zacks Investment Research   |  Jul 29, 2019 10:24PM ET
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Marriott International, Inc. (NASDAQ:MAR) is scheduled to report second-quarter 2019 results on Aug 5, after the closing bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.2%. Additionally, it posted an average trailing four-quarter positive earnings surprise of 16.3%.

Q2 Expectations

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.56, lower than $1.73 reported in the prior-year quarter. Over the past 30 days, the company’s earnings estimates have witnessed downward revision by a penny. For quarterly revenues, the consensus mark is pinned at nearly $5,531 million, suggesting growth of 3.5% from the year-ago quarter reported figure.

Let us delve deeper into factors that are likely to influence Marriott second-quarter results.

Factors at Play

Marriott’s top line in the to-be-reported quarter is likely to be driven by a surge in franchise fees and base management fees. The Zacks Consensus Estimate for franchise fees is likely to increase 8.8% to $517 million, whereas the same for base management fees is expected to climb 2.3% to $307 million. Moreover, for the second quarter of 2019, the company expects comparable system-wide RevPAR to increase in the range of 1-2% in North America (at constant currency). Marriott anticipates the same to rise 2-4% outside North America and approximately 1-3% worldwide.

Rising demand for hotels in international markets and expansion of Marriott’s brands are also likely to provide a boost to the top line in the second quarter. Meanwhile, strong room growth is driving the company’s performance. Marriott is optimistic about its growth potential in the Asia Pacific market.

Marriott efforts to capitalize on global travel trends in China, India and Indonesia also bode well. High population along with a burgeoning middle class is expected to help the company derive profits from operations in these countries.

Earnings in the quarter are likely to decline due to tough year-over-year comparison. In the prior-year quarter, the company registered a gain of 26 cents from the sale of hotels.

Marriott International Price and EPS Surprise

What Does the Zacks Model Say?

Our proven model does not show that Marriott is likely to beat earnings estimates in the second quarter. This 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marriott has an Earnings ESP of -1.07% and a Zacks Rank #3, which make surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Consumer Discretionary sector that investors may consider as our model shows that these have the right combination of elements to come up with an earnings beat in the to-be-reported quarter:

SeaWorld (NYSE:SEAS) has an Earnings ESP of +11.01% and a Zacks Rank #2. The company is scheduled to report quarterly numbers on Aug 6.

Callaway Golf (NYSE:ELY) sports a Zacks Rank #1 and is supposed to report quarterly results on Aug 8. The company’s Earnings ESP is +2.97%.

Wynn Resorts (NASDAQ:WYNN) has a Zacks Rank #3 and an Earnings ESP of +2.65%.

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Wynn Resorts, Limited (WYNN): Free Stock Analysis Report

Marriott International (MAR): Free Stock Analysis Report

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Original post

Zacks Investment Research
Factors Setting The Tone For Marriott's (MAR) Q2 Earnings
Factors Setting The Tone For Marriott's (MAR) Q2 Earnings

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