Marriott International (MAR) will publish its third-quarter 2020 earnings report today (November 6), before the US market opens. Based on 9 Zacks analysts’ forecast the consensus EPS forecast for the quarter is $-0.07, which represents a year-over-year change of -104.8%. The reported EPS for the same quarter last year was $1.47. Revenues are expected to be $2.40 billion, –54.7% from the same quarter in 2019.
The massive fall in international travel demand during the first half of 2020 translates into a loss of 440 million international arrivals and about USD 460 billion in export revenues from international tourism. This represents over five times the loss in receipts recorded in 2009 amid the global economic and financial crisis. Overall global tourism declined over 65% in the first half of 2020. (1)
As the tourism industry has been one of the most severely hit industries during the pandemic, it is highly likely to see negative income and EPS numbers. However, the published estimated number ratio is going to be much more important as these numbers, in line with its Q4 outlook, will give a better picture to investors and the market participants of how this industry will be able to get back on its feet.
In the past 4 quarters, Marriott missed three estimates, only beating in one, Q4 of 2019, however, since many countries lowered the lockdown level during summer holidays, and the estimates number is very low, it is also likely to see that they could possibly beat the expectations.
What more must be noted in the report?
When it comes to special situations, companies are always thinking about creative ways to increase income. For instance, some airlines are offering trips to nowhere, on simple sightseeing tours – Quantas and Singapore Airlines have been oversubscribed for such trips. It is the same for many other businesses.
For the share price in the market, besides earnings reports and numbers, the next quarter outlook must be in focus. Additionally, news like what Newswire is reporting of their “wide-ranging strategic partnership with Grab, that will see both companies integrating their offerings to bring the premium hospitality experience into the hands of millions of consumers in Southeast Asia. This is Marriott International’s first extensive integration with a very popular app platform in Southeast Asia, and Grab’s most comprehensive agreement with a hospitality group to date.” (2)
And finally, the overall stock market future movement will depend on the size and scope of the US stimulus package, which will likely now be at the lower end of expectations, however regardless of the winner, the new fiscal package will be one of the first must-do plans of the next President, which likely going to lift the Airline and Tourism industry, which should be beneficial for the Marriott share price.
Technical review
While the Zacks Ranking for its share is #3 (Hold), it could have more than 50% recovery after the free fall of early 2020, however, it is currently trading under a weekly and daily trend line, and shows 100 EMA & 61.8% of its Fibonacci level at $110, as a key resistance level. Positive reports and news will be able to help the market bulls, while between September high of $108 and $110 is a key area and they need to confirm these levels to be able to move higher. However, on the flip side, the 38.2 Fibonacci at $87 is the key support. In the short term, before any certain fiscal stimulus package, a consolidating side movement between $90-$100 is more likely to be seen.
- https://www.e-unwto.org/doi/epdf/10.18111/wtobarometereng.2020.18.1.5
- https://finance.yahoo.com/news/grab-marriott-international-ink-wide-020000284.html
Ahura Chalki
Market Analyst
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