Rating Change #6
Marriott International Inc (MAR - Get Report) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally poor debt management.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, MARRIOTT INTL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- MARRIOTT INTL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARRIOTT INTL INC turned its bottom line around by earning $1.21 versus -$0.99 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.21).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 315.7% when compared to the same quarter one year ago, falling from $83.00 million to -$179.00 million.
- The debt-to-equity ratio is very high at 7.22 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.
Marriott International, Inc. operates and franchises hotels and related lodging facilities worldwide. The company has a P/E ratio of 52.7, below the average leisure industry P/E ratio of 56.2 and above the S&P 500 P/E ratio of 17.7. Marriott International has a market cap of $10.5 billion and is part of the services sector and leisure industry. Shares are down 23.9% year to date as of the close of trading on Tuesday.You can view the full Marriott International Ratings Report or get investment ideas from our investment research center.