On Monday, Stifel raised its price target for Marriott Vacations Worldwide (NYSE:VAC), a leading global vacation company, from $102.00 to $112.00, while keeping a Buy rating on the stock.
The adjustment comes with a revision of the company's earnings per share (EPS) estimates for the coming years.
According to Stifel's analysis, the 2024 EPS estimate for Marriott Vacations remains unchanged at $6.29. However, the firm has increased its 2025 EPS estimate to $7.50, up from the previous $7.12 forecast, and its 2026 EPS estimate to $9.21, up from $8.49. These adjustments reflect a positive outlook for the company's financial performance in the upcoming years.
The firm also provided an estimated net asset value (NAV) for Marriott Vacations at $110.50. This NAV is based on various industry multiples applied to the company's projected financial metrics, including an 8.0x multiple on estimated 2024 timeshare sales, an 11.0x multiple on resort management service fees, and a 12.5x multiple on Marriott International (NASDAQ:MAR) royalty fees. Additionally, the NAV calculation includes an 8.0x multiple on the rental business, 7.0x on the financing business, and 8.5x on selling, general, and administrative expenses (SG&A).
Stifel's report highlights that Marriott Vacations is trading at approximately 7.9 times the firm's estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025.
In other recent news, Marriott Vacations Worldwide Corporation has reported robust Q3 earnings, demonstrating a 5% year-over-year increase in contract sales and nearly 90% resort occupancy. These positive results can be attributed to strategic initiatives like the first-time buyer financing promotion and the opening of a new resort in Waikiki, expected to bolster annual contract sales by $30 million to $50 million. Despite the Maui wildfires, the company has shown resilience, with CEO John Geller projecting low single-digit maintenance fee increases for 2025.
Financially, Marriott Vacations stands firm with $231 million in adjusted EBITDA for the Vacation Ownership segment and over $900 million in liquidity. However, the Exchange and Third-Party Management segment experienced a $7 million decline in adjusted EBITDA, primarily due to Aqua-Aston's lower profits post-Maui wildfires.
In other recent developments, the company has promoted Scott Weisz to Executive Vice President, Strategic Business Operations. Weisz, with over two decades at the company, is tasked with leading efforts to accelerate growth for core and new products and to enhance operating efficiencies through business modernization.
Looking ahead, the company plans to open a new Hyatt Vacation Club resort in Orlando and implement initiatives to improve operational efficiencies, potentially yielding an additional $50 million to $100 million annually by 2026.
InvestingPro Insights
Complementing Stifel's positive outlook on Marriott Vacations Worldwide (NYSE:VAC), recent data from InvestingPro provides additional context to the company's financial performance and market position.
VAC's P/E Ratio (Adjusted) for the last twelve months as of Q3 2024 stands at 13.53, indicating that the stock is trading at a relatively modest valuation compared to its earnings. This aligns with Stifel's view of the company's potential for growth and profitability.
InvestingPro Tips highlight that VAC has raised its dividend for 3 consecutive years and has maintained dividend payments for 11 consecutive years. This consistent dividend policy may be attractive to income-focused investors and suggests management's confidence in the company's financial stability.
The company's revenue for the last twelve months as of Q3 2024 was $3,194 million, with a quarterly revenue growth of 11.98% in Q3 2024. This growth trend supports Stifel's increased EPS estimates for the coming years.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 11 more InvestingPro Tips available for VAC, providing a deeper understanding of the company's financial health and market position.
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