Leading hotelier, Marriott International, Inc. (MAR) is set to report first quarter 2014 results on Apr 29, 2014. In the last quarter, it delivered a negative earnings surprise of 2.0%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Though the company posted dismal fourth quarter 2013 results, the previous three quarters were reasonably good for the company. Results in the fourth quarter were primarily impacted by the shift in Marriott’s fiscal calendar.
Marriott is progressing well on the back of a growing North American business and significant international expansion. Revenue per available room (RevPar) of this leading hotelier remained positive throughout 2013 and we expect the trend to continue.
Given the low supply environment, the company should be able to raise its room rate, going forward, thereby boosting the top line. Driven by these strong fundamentals, the company expects system worldwide RevPar to increase in the first quarter of 2014. Meanwhile, it expects earnings per share to be in the range of 47 cents to 52 cents, up year over year.
However, like other leading hoteliers, Marriott is also exposed to lingering uncertainty in its operating regions. Government austerity, geo-political tension and a weak economic condition in China remain near-term concerns. In fact, China's economy grew at the slowest pace in the first quarter of 2014 in the past one and a half years. Moreover, growth has slowed down a bit in Brazil. Rising political turmoil in some Middle East countries has also added to the woes.
Earnings Whispers?
Our proven model does not conclusively show that Marriott International is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Zacks ESP is 0.00%.
Zacks Rank: Marriott International’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement.
Other Stocks to Consider
Other stocks in the broader consumer discretionary sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Wynn Resorts Ltd. (WYNN), with Earnings ESP of + 1.90% and a Zacks Rank #2 (Buy).
The Walt Disney Company (DIS), with Earnings ESP of + 1.03% and a Zacks Rank #2.
MGM Resorts International (MGM), with Earnings ESP of + 20.00% and a Zacks Rank #3.
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