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When Marriott International Inc (NASDAQ:MAR) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Marriott International has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see MAR has performed. Check out our latest analysis for Marriott International
Did MAR’s recent earnings growth beat the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess many different companies on a similar basis, using the latest information. For Marriott International, its latest earnings (trailing twelve month) is US$1.37B, which, in comparison to the previous year’s figure, has climbed up by a substantial 75.90%. Since these figures may be fairly nearsighted, I’ve determined an annualized five-year figure for Marriott International’s earnings, which stands at US$701.39M This shows that, on average, Marriott International has been able to consistently raise its net income over the last couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is only because of industry tailwinds, or if Marriott International has experienced some company-specific growth. Over the past few years, Marriott International expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 14.16% over the prior twelve months, and 10.97% over the past half a decade. This means that any tailwind the industry is benefiting from, Marriott International is capable of amplifying this to its advantage.
What does this mean?
Marriott International’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Marriott International to get a more holistic view of the stock by looking at: