Shares of Marriott International (NASDAQ:MAR) have outperformed its industry so far this year. The stock has gained 53.5% as compared to the industry’s 19.6%.
Moreover, upward revision in earnings estimates for the current and next year reflects analysts’s unwavering confidence in the company. Over the past one month, current and next year earnings estimates inched up 2.4% and 2.1%, respectively. The company also delivered positive earnings surprises in each of the trailing four quarters, the average beat being 9.11%.
Per our VGM Score, which identifies the most attractive value, growth and momentum characteristics, Marriott has a Growth Score of B reflecting the stock’s high growth potential.
Driven by a slew of positives, the prospects for this Zacks Rank #2 (Buy) company make analysts optimistic about the stock.
What Makes Marriott an Attractive Pick?
Estimated Earnings and Revenues: Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels are often indicative of strong prospects (and stock price gains). For the current year, Marriott’s earnings per share are expected to grow nearly 11%. Moreover, year-over-year sales growth for the current year is expected at 32.9%.
Acquisition of Starwood Hotels & Resorts: Marriott continues to rely on acquisitions in order to expand its footprint. Notably, after the acquisition of Starwood Hotels & Resorts on Sep 23, 2016, Marriott became the world’s largest hotel company. Currently, it has more than 6,400 properties across 126 countries and territories, under 30 brand names.
Post-acquisition, shares of the company surged 85.5% while the broader S&P 500 index gained 20%.
Boosting Shareholders Wealth: The company has a dividend distribution policy and a share repurchase program in place to boost shareholders’ value. Based on certain assumptions, Marriott expects cash available for shareholders to total $8.3-$9.3 billion for the three years (2017 through 2019). Also, it expects to return $1.4-$1.5 billion to shareholders in dividends, assuming a continued 30% payout ratio and $6.9 to $7.8 billion in share repurchases over the three-year period.
Frequent share buybacks and continuous increase in quarterly dividend payments affirm the company’s optimistic outlook and prospects.
In fact, Marriott delivered a return on equity (ROE) of 31.6% in the trailing 12 months compared with the industry’s gain of 6.1%. This supports its growth potential and indicates that the company reinvests more efficiently compared to peers.
Expansion Strategies: Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in the international markets. The company plans to significantly grow its global portfolio of luxury and lifestyle brands. Meanwhile, it anticipates gross room additions of 7% in 2018 which is likely to continue building economics, scale and consumer preference for its brands. The company’s continuous expansion plans are likely to add to the top line and drive margins, which in turn makes the company a lucrative investment option.
Zacks Rank & Other Stocks to Consider
Marriott carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Other stocks with the same Zacks Rank in the industry are Choice Hotels International, Inc. (NYSE:CHH) , Hilton Worldwide Holdings Inc. (NYSE:HLT) and InterContinental Hotels Group PLC (NYSE:IHG) .
Current-year earnings for Choice Hotels are expected to increase 16%.
Hilton’s next-year earnings are estimated to rise 18.6%.
InterContinental Hotels’ current-year earnings are expected to grow 11.3%.
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Marriott International (MAR): Free Stock Analysis Report
Intercontinental Hotels Group (LON:IHG
Choice Hotels International, Inc. (CHH): Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report
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