Marriott (MAR) Q1 Earnings: Will RevPAR Growth Boost Sales?

Marriott International, Inc. (NASDAQ:MAR) is scheduled to report first-quarter 2018 results on May 8, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 12%.

Q1 Expectations

The question lingering in investors’ minds now is whether Marriott will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.25, higher than $1.01 in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In the fourth quarter of 2017, it witnessed earnings growth of 31.8% on a year-over-year basis.

Meanwhile, analysts polled by Zacks expect revenues of nearly $5,753 million, up 3.5% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

We believe Marriott’s top line in the first quarter is likely to be driven by decent RevPAR growth across both domestic and international markets, courtesy of increased scale and distribution post Starwood acquisition and strong leisure demand. Given a steady rise in business and leisure travel, and higher transaction volumes, Marriott is well-poised to grow in the near as well as long term. In the last reported quarter, worldwide, system-wide RevPAR rose 4.6%.

Increasing business and leisure travel backed by improving economic indicators and positive employment numbers along with strong transient demand is likely to boost Marriott’s performance in the first quarter. Rising North American business and large international exposure also bode well for the company.

Additionally, the company is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. For 2018, it anticipates gross room additions of 7%, which is likely to continue building economics, scale, and consumer preference for its brands.

We expect higher RevPAR, solid cost controls and synergies from Starwood acquisition to contribute significantly to the company’s margin improvement, which in turn should boost EPS.

What Does the Zacks Model Unveil?

Our proven model shows that Marriott is likely to beat earnings estimates this quarter. This is because the stock has the right combination of two ingredients — 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 +0.40% and a Zacks Rank #3.

Stocks to Consider

Here are a few other stocks from the Restaurant space that investors may consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Ruth's Hospitality Group, Inc. (NASDAQ:RUTH) has an Earnings ESP of +1.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jack in the Box Inc. (NASDAQ:JACK) has an Earnings ESP of +2.33% and a Zacks Rank of 3.

Del Taco (NASDAQ:TACO) has an Earnings ESP of +10.00% and a Zacks Rank #2.

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