NEW YORK (TheStreet) -- Shares of Marriott Vacations Worldwide (VAC) - Get Report are down 0.61% to $78.55 in early morning trading Tuesday despite MKM Partners' price target increase to $92 from $75, while reiterating its "buy" rating.
According to MKM, Marriot Vacations announced three important new additions to its system: improving return on invested capital (ROIC) based on higher EBITDA, a streamlined/more efficient balance sheet, and accelerating share repurchase activity.
Marriott reported 2014 fourth quarter earnings of 69 cents per share and 2014 fiscal year earnings of $2.90 per share.
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MKM analysts lowered their first quarter earnings estimates for 2015 to 71 cents from 73 cents per share, and increased their 2015 fiscal year earnings estimates to $3.31 from $3.19 per share. The firm expects earnings of $3.84 per share in 2016.
Marriot reported total revenue of $1.73 billion in 2014, versus $1.72 billion in the year prior. Analysts expect total revenue to reach $1.85 billion in 2015 and $1.97 billion in 2016.
"We believe spin-off of Starwood Hotels' (HOT) timeshare business will be a catalyst for the sector," analysts noted, adding that room for further acceleration of share buybacks and continued development of capital-efficient inventory sourcing are catalysts as well.
Marriott Vacations Worldwide is a developer, marketer, seller and manager of vacations ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands.
Sepearately, TheStreet Ratings team rates MARRIOTT VACATIONS WORLDWIDE as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate MARRIOTT VACATIONS WORLDWIDE (VAC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VAC's revenue growth has slightly outpaced the industry average of 7.7%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.27% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, VAC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MARRIOTT VACATIONS WORLDWIDE has improved earnings per share by 11.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MARRIOTT VACATIONS WORLDWIDE increased its bottom line by earning $2.17 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $2.17).
- Net operating cash flow has increased to $108.00 million or 21.34% when compared to the same quarter last year. In addition, MARRIOTT VACATIONS WORLDWIDE has also modestly surpassed the industry average cash flow growth rate of 18.50%.
- You can view the full analysis from the report here: VAC Ratings Report