VAC - Embedded Expectations Analysis - 2021 04 20
Marriott Vacations Worldwide Corporation (VAC:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 27.9x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their revenue growth, tour demand, and the hospitality industry recoverySpecifically, management may have concerns about travel restrictions for their sales centers in Kauai, their affiliation with Interval, and the health of the hospitality industry. In addition, they may lack confidence in their ability to sustain rental revenue growth, maintain ancillary margins in their resort management business, and improve their notes receivable balance. Also, they may be concerned about the sustainability of pent-up demand for their tour offerings, the progress of their rental business recovery, and the timing of fee revenues for vacation ownership management
Marriott Vacations Worldwide is a vacation company that provides vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The company's reportable segments are; Vacation Ownership, which develops, markets, sells, rents and manages vacation ownership and related products under its licensed brands; and Exchange and Third-Party Management, which includes exchange networks and membership programs comprised of exchange, getaways, interval gold and interval platinum, club interval, sales and marketing support for interval international network resorts, and operational support for interval international network resorts.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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