Q3 Preview: Marriott (MAR) Outlook May Draw Gasps, But Some Estimates Outdated

Marriott International, Inc. (NYSE: MAR), is trading strong Wednesday afternoon, heading into its quarterly earnings report.

Following the close of trading, Marriott is expected to report third-quarter earnings of 27 cents per share, on revenue of $2.83 billion. Earnings would be a 27 percent decline from last quarter, but a 23 percent gain from 22 cents per share reported in the same period last year.

Marriott shares fell 22 percent in the quarter, to $29.28 at the end of August. The is down 4.7 percent since then, and off 32 percent in 2011 through today.

Not making any adjustments for cash or equivalents, Marriott is trading at 16.3 times next year's earnings expectations, compared with 17.2 times at Starwood Hotels & Resorts (NYSE: HOT), and 36.4 times for Hyatt Hotels (NYSE: H).

Data from Bloomberg has 15 analysts with a Buy rating on Marriott, 11 at Hold, and none with a Sell. The Street price target average is $38.50, with a low of $33 and high of $45. Marriott has traded within a range of $25.49 to $42.78 over the last 52-week period.

Analyst Comments

• Goldman Sachs is modeling EPS of 27 cents. Goldman notes the "key for Marriott this quarter will be showing that its hotels are performing more in line with the industry in areas where they have underperformed over the last several quarters (primarily RevPAR growth)." RevPAR growth should be 6.8 percent, according to Goldman. Guidance should produce a range of 3 to 5 percent, though Goldman is aiming to the higher-end with 4.4 percent of growth for RevPAR.
  
  Finally, Goldman commented, "In share repurchases we have modeled only $70 mn for the quarter down from $643 mn in the first half of the year, but there could be upside to our number."
  
  
• JPMorgan says Marrott's outlook will be key for the quarter. JPMorgan said it expects "MAR will guide to +3-5% for 2012 RevPAR growth, +4% unit growth, and provide a wide range for lodging fee growth (high-single digit to lower-double digit year-over-year growth). We also believe MAR bought back between $250 to $300m of stock during the 3Q11."
  
  JPMorgan is at 26 cents for earnings, with a 6.8 percent increase in RevPAR.
  
  
• Wells Fargo does "not believe Q3 will prove to be a meaningful positive catalyst low RevPAR guidance or slowing booking trends could spark further concern for hotels but stronger numbers may be viewed w/skepticism." Wells also sees headline guidance may initially read as a disappointment, given much guidance has been outdated and whether or not the spinoff of its timeshare business is a good thing or not.
  
  Wells is looking for Marriott to guide for 3 to 5 percent growth in RevPAR for fiscal 2012, but it contends that some are still above that range.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Marriott's past performance at Streetinsider's Marriott Income Statement.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• Meta shares dip on softer Q2 revenue guidance, elevated AI spending plans
• Check Point Software Technology (CHKP) Tops Q1 EPS by 3c