Lodging company Marriott International (MAR)
is making significant changes in 2011 and also forecasts positive results going into 2012. A major buyback of shares and the completion of a planned spinoff are under way, possibly creating an opening for investors.
Marriott International owns and manages hotels worldwide under a dozen brand names. The company owns approximately 3,700 properties providing 640,000 rooms. Just over 80 percent of Marriott's properties are in the United States, leaving 20 percent in international markets.
For the third quarter of 2011, Marriott reported adjusted net income of 29 cents per share, a 32 percent increase over the same quarter in 2010. For the first three quarters of the year, adjusted income was 95 cents per share, up 20 percent from 79 cents per share.
GAAP earnings per share for the three quarters were 16 cents, due to 79 cents in one-time charges so far in the year, mostly related to the timeshare spinoff. Management guidance for the fourth quarter is earnings of 45 cents to 50 cents and full-year results of between $1.37 and $1.42. In 2010, Marriott International earned $1.15 per share.
Through the first nine months of 2011, Marriott has bought back $1.2 billion worth of shares. As a result, the year-over-year share count has dropped by 5 percent. The result is that net income per share increased in the third quarter by more than 30 percent while net income in dollar terms was up 25 percent.
In early 2011, the company announced the spinoff of the timeshare portion of the Marriott business. The spinoff is expected to be completed by the end of the year. Currently the timeshare properties generate approximately 10 percent of Marriott's overall revenues.
For 2012, the company forecasts a 30,000 unit increase in rooms and 3 percent to 7 percent growth in revenue per available room (“revpar” in hotel-speak). The management discussion of possible 2012 results stresses that the results are based more on assumptions than expectations. That said, the offered 2012 EPS range is between $1.48 and $1.68.
Recently, the analysts at Morgan Stanley reiterated their equal weight rating on Marriott International, citing economic uncertainty going into 2012.
The company next reports on Feb. 14, 2012.
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