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Marriott Vacations Worldwide Corporation's (NYSE:VAC) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. However, we think the company is showing some signs that things are more promising than they seem.
See our latest analysis for Marriott Vacations Worldwide
The Impact Of Unusual Items On Profit
For anyone who wants to understand Marriott Vacations Worldwide's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$76m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Marriott Vacations Worldwide doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On Marriott Vacations Worldwide's Profit Performance
Unusual items (expenses) detracted from Marriott Vacations Worldwide's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Marriott Vacations Worldwide's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Marriott Vacations Worldwide, you'd also look into what risks it is currently facing. For example, Marriott Vacations Worldwide has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Today we've zoomed in on a single data point to better understand the nature of Marriott Vacations Worldwide's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.