Earnings Preview: Marriott International

Marriott International (MAR) is set to report earnings before the market opens on Thursday, July 10th. Marriott International, Inc. is a leading worldwide hospitality company with nearly 3,000 lodging properties in the United States and 67 other countries.

MAR is expected to earn 49 cents per share for its 2nd quarter. We expect Marriott to announce earnings that will miss investors’ and analysts’ expectations. We think that it is likely that during the conference call management could lower the company’s profit outlook going forward.

Analysts’ estimates have been coming down for the quarter, starting at $0.58 and now stand at the $0.49 consensus. Wall Street believes the hotel operator will see its sales decline 14% for this quarter and anticipates 32% growth next quarter. In light of gas prices, airline surcharges, economic conditions… The Correct Call believes that number is coming down.

Valuation wise, the company is in OK shape with a PEG ratio of 1.14, a forward PE of 12 with a projected 16% growth rate (although we expect estimates to come down and the forward PE to match or exceed the growth rate), return on equity of 37% and currently trading at only .73 times sales, again we expect this number could rise if sales dip.

MAR shares have a history of declining following their quarterly check-up; sometimes following a slight pop. With its solid fundamentals, we see MAR as more of a short-term trading opportunity as we expect to see its share price move lower in the next 10-to-30 days.

Suggested Stop: $29.81

Disclosure: None