Why Marriott Vacations Shares Dropped

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Marriott Vacations Worldwide (NYSE: VAC  ) were sent packing today, falling as much as 15%, after its guidance disappointed in its earnings report.

So what: The parent of Marriott Vacation club and other timeshare-based resort properties actually beat estimates, delivering an adjusted per-share profit of $0.54, against expectations of $0.46. Revenue increased 3%, to $499 million, beating estimates at $478.6 million. However, investors seemed to be turned off by the fact that Marriott actually lost $0.22 a share when accounting for lawsuit settlements and other one-time charges, and the disappointing forecast. While its 2013 EPS projections of $1.77 to $2.00 were ahead of estimates at $1.76, Marriott said it expected free cash flow of just $35 million to $50 million, well below 2012's total of $132 million.

Now what: Today's drop seems exaggerated. Investors may be getting tired of seeing non-recurring costs eat into profits, but EPS growth has been strong, even if that means adjusting for those costs. North American contract sales were up 10% in the quarter, and the improving economy should help drive future growth. Marriott should be able bounce back from today's drop in the near future.

Stay up to date on Marriott Vacations. Click here to add the company to your Watchlist.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 14, 2013, at 2:04 PM, barbie15fletcher wrote:

    Most timeshare companies like Marriott are taking advantage of people, often those who are more vulnerable and less able to resist hard sales tactics. I have heard of many cases where maintenance costs rise well above inflation. It would appear the timeshare companies lock people into contracts and then drive up their profits though increased maintenance charges. I recommend you to read this article on how most timeshare companies work:

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2270488, ~/Articles/ArticleHandler.aspx, 10/1/2016 6:49:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 21 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:02 PM
VAC $73.32 Up +0.69 +0.95%
Marriott Vacations… CAPS Rating: *****