In any market environment, there are plenty of great American companies out there set to move higher over time. It’s just a matter of knowing how to find them. I combine technical, behavioral and fundamental analysis, and of the three, the fundamentals are really the most important. Knowing that the fundamentals are strong gives us the confidence to become part owners of these companies.
I want to understand the health of the company, the ability of management to execute and the long-term potential. When seeking a company, I look at industries or industry niches that are growing rapidly, and I also look for companies growing even faster than their industries.
I really like plays on strengthening consumer purchasing power right now, and one name that’s well positioned to profit is Marriott International (NASDAQ:MAR). As the largest hotel company in the world — it has been since it bought Starwood Hotels and Resorts in 2016 – it stands to benefit from both consumer and business spending. Its hotels, ranging from all of the various Marriott hotels to Ritz-Carlton, Sheraton and Westin, not to mention a vacation club and longer-term lodging for business travelers, are everywhere.
All of this from a single root beer stand founded in 1906 by John Willard Marriot and his wife, Alice Sheets Marriott.
Marriott Stock Dinged by Earnings
MAR has been a good stock going back to the Starwood acquisition, and I see more upside even with the slight bump in the road from its latest earnings results. For the second quarter, the company missed on revenue and issued a forecast for one key hotel metric below expectations. Still, there was a lot of good in the report.
Let’s start with the numbers. Marriott stock earned $1.73 a share, ahead of estimates of $1.36. Revenue of $5.35 billion was shy of expectations of $5.99 billion.
Looking ahead, management expects revenue per available room (or revPAR) to increase 1.5%-2% this quarter, which is below the expected growth for the full year because the July 4 holiday came in the middle of the week, which reduced bookings. It also doesn’t help that comparisons to last summer are tough because more rooms were booked then due to multiple hurricane relief efforts going on. Still, full-year expectations for revPAR to increase 3%-4% were unchanged, which is important.
Plus, full-year earnings guidance was actually raised from $5.43-$5.55 a share to $5.81-$5.91 a share, all of which was above the Street’s expectations of $5.55. Earnings growth for the current quarter and current year are still expected to be 25%-plus.
The company continues to grow, and I view the post-earnings dip as a great opportunity to buy in at discounted prices. Over time, I see Marriott stock heading to $175 or higher.
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