Can’t control the macro but a strong Q3, solid forward guidance, and aggressive share repurchase keep the thesis intact



Marriott reported revenue and EBITDA that was 3% above our estimate but slightly below the Street.  EPS exceeded our estimate by 11% and Street estimates by 8% due to their aggressive share buyback in the quarter.  MAR bought back $550 million worth of stock in the quarter.  Given the free cash profile and low valuation, we expect the company will continue to be aggressive on this front.  The macro remains uncertain but long term, MAR remains in the enviable position of a growth company with little capital needs and a management team willing to deploy that cash flow in the most shareholder friendly way.




  • System-wide room growth was in-line with our estimate
  • RevPAR came in better than we expected - partly due to a favorable FX impact
  • Owned, leased, corporate housing and other revenue was $11MM better than we estimated driven by higher branding and termination fees, which also drove higher gross margins of $35MM vs. our estimate of $23MM.  Higher recurring branding fees deserve a high multiple.
    • Branding fees were $12MM better than we estimated or $32MM
    • Termination fees of $8MM were $4MM above our estimate
    • F&B and other revenues were $8MM lower than our estimate but partly offset by better RevPAR ($3MM)
    • CostPAR looks like it increased 3.9% YoY
  • Fee income of $289MM was in-line with their guidance and $6MM better than we estimated
    • 50% of the better fee performance was due to higher incentive fees, while the balance was due to better RevPAR performance
  • Despite contract sales beating the high end of MAR’s guidance, timeshare segment profits came in $5MM below our estimate
    • Contract sales were 7% above our estimate, entirely due to a spike in JV sales
    • Sales and service revenue net of direct expenses came in at $36MM vs. guidance of $40-45MM
  • Other stuff:
    • G&A was $5MM higher than we estimated
      • $13MM of the increase was attributed to
        • $8MM of spin-off related expenses
        • $5MM related to the increase of a guarantee reserve for one hotel and the write-off of deferred contract acquisition costs.
      • Offset by $6MM of lower legal expenses (should be sustainable)
    • Net interest expense was $2MM higher than we estimated but $3MM below company guidance
    • Equity earnings were $3MM higher than our estimate and guidance
    • Tax rate came in at 32% vs our estimate of 34%
    • Diluted share count was 9MM lower than we estimated to a much more aggressive buyback

SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more