Stock Story -
Global hospitality company Marriott (NASDAQ:MAR) fell short of analysts' expectations in Q2 CY2024, with revenue up 6% year on year to $6.44 billion. It made a non-GAAP profit of $2.50 per share, improving from its profit of $2.26 per share in the same quarter last year.
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Marriott (MAR) Q2 CY2024 Highlights:
- Revenue: $6.44 billion vs analyst estimates of $6.47 billion (small miss)
- EPS (non-GAAP): $2.50 vs analyst expectations of $2.48 (in line)
- EPS (non-GAAP) Guidance for Q3 CY2024 is $2.30 at the midpoint, below analyst estimates of $2.37
- EPS (non-GAAP) Guidance for the full year is $9.32 at the midpoint, missing analysts' estimates by 2%
- Gross Margin (GAAP): 95.4%, in line with the same quarter last year
- RevPAR: $142.20 at quarter end, up 7.6% year on year
- Market Capitalization: $68.2 billion
Founded by J. Willard Marriott in 1927, Marriott International (NASDAQ:MAR) is a global hospitality company with a portfolio of over 7,000 properties and 30 brands, spanning 130+ countries and territories.
Hotels, Resorts and Cruise LinesHotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one tends to sustain growth for years. Over the last five years, Marriott grew its sales at a weak 3.4% compounded annual growth rate. This shows it failed to expand in any major way and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or emerging trend. Marriott's annualized revenue growth of 16.8% over the last two years is above its five-year trend, suggesting some bright spots.
We can dig further into the company's revenue dynamics by analyzing its revenue per available room, which clocked in at $142.20 this quarter and is a key metric accounting for daily rates and occupancy levels. Over the last two years, Marriott's revenue per room averaged 15.4% year-on-year growth. This number doesn't surprise us as it's in line with its revenue growth.
This quarter, Marriott's revenue grew 6% year on year to $6.44 billion, missing Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 7.2% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Marriott's operating margin has been trending down over the last year, but it still averaged 16.7%, top-notch for a consumer discretionary business. This shows it's an efficient company that manages its expenses effectively.
This quarter, Marriott generated an operating profit margin of 18.6%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable.
Key Takeaways from Marriott's Q2 Results We struggled to find many strong positives in these results. Although this quarter's revenue and EPS were relatively in line with analysts' expectations, its earnings forecast for next quarter and the full year fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 4.1% to $229 immediately after reporting.
