Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Marriott Are Falling on Friday

By Lou Whiteman - May 10, 2019 at 2:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings gave investors little to get excited about.

What happened

Shares of Marriott International (MAR -1.09%) traded down 5% on Friday even though the company posted expectation-beating earnings and raised its dividend, as investors focused on a revenue shortfall and an overall sluggish environment for hotel stocks. The stock was down about 3% as of 2:11 p.m. EDT.

So what

Marriott's quarter at first glance looks like a winner, with the company reporting adjusted earnings of $1.41 per share, ahead of the $1.34 consensus estimate. But total revenue, at $5.01 billion, was up less than 1% year over year and came in short of the $5.11 billion analysts were expecting.

Adjusted net income actually fell slightly year over year, but Marriott's per-share number was aided by stock repurchases.

A view of a building with its reflection in a pool in front.

Marriott-owned Ritz Carlton Phulay Bay, Thailand. Image source: Marriott.

Worldwide comparable revenue per available room, or RevPAR, gained 1.1%, which is a slower growth rate than in previous quarters.

Marriott did raise its full-year earnings-per-share guidance to a range of $5.97 to $6.19 from $5.87 to $6.10. Wall Street was already near the upper edge of the previous guidance, expecting $6.09 per share. The company also increased its quarterly dividend by 17% to $0.48 per share.

"Our results in the first quarter highlight the resiliency of our business model and the strength of our brands," company CEO Arne M. Sorenson said in a statement. "Year to date through May 8, we have returned nearly $1.2 billion to our shareholders through share repurchases and dividends, and we continue to expect to return at least $3 billion for full year 2019."

Now what

There was nothing wrong with Marriott's quarter, but there was little to get excited about. The company should be a cash-generating machine for the foreseeable future, and as it showed in its 2016 deal for Starwood Hotels & Resorts and its recent push to compete with Airbnb, it isn't afraid to make bold moves to deploy that capital.

That wasn't enough to get the stock going on what is a down day on Wall Street. But for long-term investors, Marriott continues to show it has the wherewithal to be a survivor throughout the business cycle.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
MAR
$155.23 (-1.09%) $-1.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.