Florida-based vacation ownership company Marriott Vacations Worldwide Corporation VAC is set to report first-quarter 2015 results on Apr 30, before the opening bell.
Last quarter, it posted a positive earnings surprise of 9.84%. Let’s see how things are shaping up for the upcoming announcement.
Factors to Consider
Marriott Vacations, one of the biggest companies in the timeshare industry, is poised to benefit from positive industry trends and boasts competitive advantages. In the fourth quarter, the company recorded higher contract sales despite flat year-over-year rental revenues. In our view, this trend is likely to continue in the first quarter as well since it has been able to maintain a steady flow of clients by offering tours to diverse locations and programs with greater outreach.
Volume per guest – sales volume for a given period divided by the number of groups toured – for Marriott Vacations increased in all the quarters of 2014 and we expect the trend to continue in the to-be-reported quarter backed by strong marketing initiatives.
The timeshare industry as a whole is extensively marketing-oriented and relies on sales initiatives to bring in new consumers. Therefore, the company’s increased marketing expenses might impact margins in the to-be reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Marriott Vacations is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Marriott Vacations is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 69 cents.
Zacks Rank: Marriott Vacations has a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Other stocks in the hotel and gaming industry that have both a positive Earnings ESP and a favorable Zacks Rank are:
Intrawest Resorts Holdings, Inc. SNOW, with an Earnings ESP of +2.17% and a Zacks Rank #2 (Buy).
La Quinta Holdings Inc. LQ, with an Earnings ESP of +14.29% and a Zacks Rank #3 (Hold).
Isle of Capri Casinos, Inc. ISLE, with an Earnings ESP of +2.44% and a Zacks Rank #1 (Strong Buy).
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