Marriott International, Inc. :MAR-US: Earnings Analysis: Q4, 2016 By the Numbers : February 17, 2017

Marriott International, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Marriott International, Inc. – Choice Hotels International, Inc., Hilton Worldwide Holdings, Inc. and Wyndham Worldwide Corporation (CHH-US, HLT-US and WYN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 5456 million, Net Earnings of USD 244 million.
  • Gross margins widened from 13.44% to 14.86% compared to the same period last year, operating (EBITDA) margins now 11.88% from 9.36%.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 5456 3942 3902 3772 3706
Revenue Growth (%YOY) 47.22 10.17 5.86 7.46 4.13
Earnings (mil) 244 70 247 219 202
Earnings Growth (%YOY) 20.79 -66.67 2.92 5.8 2.54
Net Margin (%) 4.47 1.78 6.33 5.81 5.45
EPS 0.62 0.26 0.96 0.85 0.77
Return on Equity (%) 16.71 23.54 N/A N/A N/A
Return on Assets (%) 3.9 1.77 15.47 14.36 13.21

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Market Share Versus Profits

Revenues History
Earnings History

MAR-US‘s change in revenue this period compared to the same period last year of 47.22% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MAR-US is holding onto its market share. Also, for comparison purposes, revenues changed by 38.41% and earnings by 248.57% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 13.44% to 14.86% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 9.36% to 11.88% compared to the same period last year. For comparison, gross margins were 14.21% and EBITDA margins were 11.04% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Margins

The expansion in operating (EBIT) margins from 8.50% to 10.58% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from 7.66% to 7.02%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Marriott International, Inc. is a diversified global lodging company, which engages in the operation and franchises of hotels, corporate housing properties, and timeshare properties. It operates through the following business segments: North American Full-Service; North American Limited-Service; and International. The North American Full-Service segment includes The Ritz-Carlton, EDITION, JW Marriott, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, and Gaylord Hotels. The North American Limited-Service segment comprises of AC Hotels by Marriott, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, and TownePlace Suites properties. The International segment involves The Ritz-Carlton, Bulgari Hotels & Resorts, EDITION, JW Marriott, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, Marriott Executive Apartments, AC Hotels by Marriott, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, TownePlace Suites, Protea Hotels, and Moxy Hotels. The company was founded in 1997 and is headquartered in Bethesda, MD.

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