Marriott Vacations: Zacks’ Bull of the Day Play

Marriott Vacations Worldwide Corporation (VACSnapshot Report) is cashing in on a return to travel. This Zacks Rank #1 (Strong Buy) recently raised its 2015 guidance.

Marriott Vacations is a timeshare company which manages 58 resorts with about 415,000 owners and member worldwide. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott.

It was spun off from Marriott International in 2011.

A Big Beat in the First Quarter

On Apr 30, Marriott Vacations reported its first quarter results and blew by the Zacks Consensus Estimate by 23%. Earnings were $0.85 compared to the consensus of $0.69.

Tourists are still traveling in North America. Company vacation ownership contract sales, excluding residential sales, rose 9.5% to $170 million year over year but North America was strong, with vacation ownership contract sales jumping 11% to $156 million.

North American volume per guest (VPG) grew 4.7% year over year with North America tours also rising 5.3%.

Raised Full Year Guidance

Momentum accelerated into 2015 after a solid 2014.

Marriott Vacations raised its estimates for company contracts sales growth, excluding residential, to a range of 5% to 8% from 4% to 7%.

Earnings were also boosted to between $3.29 – $3.48 from $3.16 – $3.35.

The analysts are even more bullish as the 2015 Zacks Consensus Estimate now stands at $3.47, or at the very high end of the company’s range. That is earnings growth of 18.3% over 2014.

The analysts are also bullish on 2016. They see another 16% earnings growth.

Shares Near All Time High

If you got in when the stock was spun-off from the parent Marriott in 2011 it has been quite a ride.

Shares are still trading near their all-time high.

They’re no longer cheap, with a forward P/E of 25.3. That’s well above the average of the S&P 500 which is 18.1.

But the company has started rewarding shareholders with a dividend, with a current yield of 1.1%. It also bought back $51 million in stock in the first quarter.

Investors are obviously getting in for the growth, and not the value.

For investors looking for a way to play the surging travel demand and hot hotel market, Marriott Vacations is one to keep on your short list.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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