International Growth Seekers: Check Out Marriott

One of the world's top hotel chains, Marriott International (NASDAQ: MAR  ) continues to ride higher and higher on consistently improving occupancy rates and room pricing. The internationally focused company beat analyst estimates on top-line sales as North America showed better-than-predicted results, along with a bottom-line beat that surpassed management's internal estimates. For some time now, Marriott has been one of the strongest performers in the industry, and for good reason. Management has proven itself to be an intelligent capital allocator, with a dual focus on unit-level improvements as well as global expansion via franchised properties and management services. Though the stock is up substantially over a long period of time, investors may still have a chance to ride this hospitality play even higher.

Earnings recap
For its third quarter, Marriott hauled in a bottom line of $0.52 per share -- an 18% gain over the prior year's quarter and a more than 15% premium to Wall Street average estimates of $0.45 per share. Even management had expected a maximum EPS of $0.46, proving either an especially great quarter or overly cautious guidance.

Revenue climbed nearly 16% to $3.16 billion, ahead of all estimates as well. The causes for the massive top line growth ranged from higher average room prices to a 75% increase in worldwide occupancy rates. RevPAR, the go-to measure for unit profitability in the hospitality business, grew 5% for the quarter.

Marriott continues to grow its worldwide presence, adding 44 properties and nearly 7,000 rooms to the outstanding portfolio. The company is approaching 4,000 properties total, with 850 in development and an additional 144,000 rooms on the way, mainly international.

Though it's a household name and an old brand, Marriott is far, far from ending a fantastic growth run.

Looking ahead
Even with the stellar quarter, Marriott tightened its guidance -- shaving a couple of cents off the previously issued top and bottom ends. The company now expects $1.98-$2.01 per share in full-year 2013 revenue. Worldwide comparable-sales growth should be between 4%-6%, while North American comps should be in the 4.5%-6% range.

While forward guidance wasn't particularly thrilling, the long-term implications here remain compelling for investors. Marriott is growing in all the right ways. Clearly, international expansion will keep the top line growing for years to come. The North American business is helping the bottom line maintain speed as well, with higher unit earnings (and thus fatter margins). In the meantime, management is committed to continue buying back stock. Income investors might want more out of the dividend (1.5%, currently), but cash flow is better put to use in the global expansion and market share grab taking place.

At 20 times forward one year earnings, Marriott isn't a bargain, but its growth prospects should appeal to the same type of investor. Quarter after quarter, year after year, Marriott management has proven to be a high-ROIC capital allocator with a focus on shareholder value. Even at its 52-week high, growth-seeking investors should take a close look.

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