3 Reasons Why Marriott Vacations (VAC) Stock Is Worth Buying

Vacation ownership or timeshare business is one of the fastest evolving and profitable sectors in the hospitality industry. Increasing household income and ownership satisfaction along with an inclination toward repeat purchases and frequent trips are driving the industry.

Thus, positive timeshare industry trends make it the right time to add few vacation ownership companies to your portfolio now. Florida-based, Marriott Vacations Worldwide Corporation (NYSE:VAC) , one of the major players in the timeshare industry, is one such stock worth considering.

Notably, shares of Marriott Vacations have gained 29.9% year to date, while the industry declined 0.9%.

Moreover, the Zacks Consensus Estimate for Marriott Vacations’ current-year earnings has moved up 3.6%, reflecting four upward revisions versus none downward over the last 30 days. Also, the next year’s earnings estimates have climbed 6.2% on the back of four upward revisions versus no downward revision.

All these positive earnings estimates revision testifies the unwavering confidence that analysts have in the company and substantiate the Zacks Rank #2 (Buy) for the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This apart, Marriott Vacations continues to reflect strength in several areas and should thus make a value addition to your portfolio.

Earnings & Revenue Growth: Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects (and stock price gains) for the company in question.

While Marriott Vacations has a historical earnings per share (EPS) growth rate of 17.8%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 15.6%, higher than the industry average of 9.7%.

Propelling the earnings forward is the company’s solid revenue growth story. Notably, projected sales growth for the current year is 9.6%, which is higher than the broader industry’s estimate of 2.8%.

Solid Business Growth: Marriott Vacations has been able to maintain a steady flow of clients by offering tours to diverse locations and programs with greater outreach.

Going forward, the company expects to continue driving contract sales and rental revenues via its two major growth initiatives. The first being tours from marketing programs, namely call transfer and universal encore programs, and secondly by additional sales distributions at its new locations.

Moreover, addition of new properties in the portfolio along with renovation of the company’s various vacation ownership units bodes well.

Favorable ROE: Marriott Vacations delivered return on equity (ROE) of 14.1% in the trailing 12 months compared with the industry’s gain of 4.6%. This supports its growth potential and indicates that the company reinvests more efficiently compared with its peers.

Bottom Line

Marriott Vacations faces tough competition from other vacation ownership companies like Wyndham Worldwide Corporation (NYSE:WYN) and bigger hospitality services giants like Hyatt Hotels Corporation (NYSE:H) and Hilton Worldwide Holdings, Inc. (NYSE:H) .

Yet, given the company’s credible performance compared with its peers as a result of the brand’s strong consumer affinity and solid business growth, the stock should keep performing well in the quarters ahead, thus making it a top investment choice.

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