Marriott's Stock Drops After Q4 Revenue Falls Short

Marriott International Inc. witnessed a 4.9% decline in its stock on Tuesday following the hotel operator's fourth-quarter revenue falling short of analysts' expectations, despite reporting an increase in profit for the latest quarter.

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This notable drop in stock value represents the largest percentage decrease for Marriott since September 22, 2022, when it experienced a 5.4% decline, according to Dow Jones Market Data. The stock is presently down approximately 5.3% from its all-time closing high of $249.58 per share on February 8.

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Marriott, with the ticker symbol MAR, disclosed that its fourth-quarter net income surged by 27% to $848 million, translating to $2.87 per share, up from $673 million, or $2.12 per share, in the corresponding quarter of the previous year. The adjusted fourth-quarter profit reached $3.57 per share, surpassing the FactSet consensus estimate of $2.12 per share.

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Despite the profit increase, fourth-quarter revenue amounted to $6.1 billion, falling short of the consensus analyst estimate of $6.2 billion. This discrepancy in revenue contributed to the market reaction and the subsequent decline in Marriott's stock value.

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Marriott highlighted that its hotel leisure revenue has rebounded, surpassing 2019 levels, the year preceding the COVID-19 pandemic's impact on travel. The company reported a 2% increase in hotel leisure revenue, already significantly exceeding 2019 levels. Additionally, business transient revenue at Marriott hotels grew by 3% compared to the year-ago quarter, with ongoing gains in demand from large corporate customers.

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Looking forward, Marriott provided its outlook, anticipating an adjusted first-quarter profit ranging from $2.12 to $2.19 per share, which is below the FactSet consensus estimate of $2.30 per share. For the full year 2024, the company projects adjusted earnings between $9.18 and $9.52 per share, falling short of the analyst estimate of $9.68 per share.

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Bernstein analyst Richard J. Clarke maintained a market-perform rating for Marriott, noting that the company's profit outlook was impacted by not factoring in buybacks into the figures. Despite this, Clarke expressed confidence in the guidance, stating, "Guidance is solid and likely beatable through the year. As with Hilton, we expect a year of consistent beats and raises from this level."

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Marriott also shared its plan to return $4.1 billion to $4.3 billion to shareholders in 2024, considering its $500 million acquisition of the Sheraton Grand Chicago. This move indicates the company's commitment to shareholder returns despite the challenges reflected in its recent financial results.

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