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Investors Remain Optimistic About Marriot International

Marriot International (NASDAQ: MAR) is becoming an attractive value play in a sector that is outperforming others, which is particularly notable during uncertain economic times. Despite posting its second quarter 2023 earnings results, Marriot’s stock has remained relatively flat. This is surprising given the cyclicality of the hotel industry.
Key Points
– Marriot International surpassed bearish expectations of an industry slowdown with its second quarter 2023 earnings results.
– The stock’s technical indicators show strong bullish sentiment, and the positive financial results make it a desirable investment option.
– Double-digit growth, significant stock buybacks, and analyst expectations for future earnings per share (EPS) growth create favorable conditions for a rally. Marriot offers a more affordable alternative for investors seeking exposure in the booming hotel sector.
– Marriot’s size acts as a risk-diversification tool, as its net sales have grown, especially outside of the United States. This mitigates the risk of a single country’s economy affecting the business.
– Comparing Marriot against competitors like Hilton Worldwide (NYSE: HLT) and Hyatt Hotels (NYSE: H) can guide investors towards the right opportunities in this promising sector.
– Analyst ratings may be mixed, adding some uncertainty for investors.
An Unstoppable Force Meets… A Movable Object?
Marriot’s stock chart tells an intriguing story and provides valuable insights for investors. Over the past year and a half, the stock has been trading in a narrow upward channel. While most of the market has been trading sideways, Marriot has shown clear direction.
The chart highlights a bullish pattern and other significant developments that investors should consider. The purple line represents the 200-day moving average, which is viewed as an indicator of bull and bear markets. As the stock continues to move away from this average, it indicates increasing bullish momentum.
Another technical factor driving investor interest is that the stock is trading above its previous all-time high price of $196.40. The absence of rejection or apparent resistance suggests that the market is accepting new highs, supporting Marriot’s upward trajectory.
Analyst Earnings Expectations and Momentum
Analyst earnings expectations for the next two years contribute to the stock’s momentum. The average estimated EPS growth for 2023 is 25.3%, while 2024 EPS growth projections stand at 9.2%.
While future circumstances can always change, these expectations provide a basis for potential stock appreciation. However, investors should also consider the company’s performance so far this year for more reliable guidance.
Fundamentals and Valuations
Marriot’s earnings press release highlights several aspects that management is proud of. Comparable systemwide revenues grew by 13.5% during the year, exceeding expectations for a slowdown in the lodging and tourism industry.
Net income grew by 7%, which is commendable considering the challenging period. However, earnings per share increased by 15.5%, more than double the rate of net income growth. This discrepancy is due to management’s decision to repurchase shares, signaling confidence in the stock’s value.
By repurchasing approximately 5.2 million shares for $903 million, management increased the EPS growth compared to net income growth.
Comparing Marriot to competitors using the forward price-to-earnings ratio, the stock appears undervalued. Hilton and Hyatt trade at higher forward P/E ratios of 22.8x and 34.6x, respectively, while Marriot trades at a lower 22.0x forward P/E.
Considering the projected growth for the next two years, investors can acquire Marriot’s growth potential at a relatively affordable price.

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