Marriott (MAR)

Global hospitality company Marriott (NASDAQ:MAR) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 3.7% year on year to $6.49 billion. Its non-GAAP profit of $2.47 per share was 3.5% above analysts’ consensus estimates.

Company Overview

Founded by J. Willard Marriott in 1927, Marriott International (NASDAQ:MAR) is a global hospitality company with a portfolio of over 7,000 properties and 30 brands, spanning 130+ countries and territories.

Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.

Marriott International's primary competitors include Hilton Worldwide (NYSE:HLT), InterContinental Hotels Group (NYSE:IHG), Hyatt Hotels (NYSE:H), Wyndham Hotels & Resorts (NYSE:WH), and Accor (EPA:AC).

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Marriott grew its sales at a 13.5% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or trend. Marriott’s recent performance shows its demand has slowed as its annualized revenue growth of 4.9% over the last two years was below its five-year trend.

We can dig further into the company’s revenue dynamics by analyzing its revenue per available room, which clocked in at $129.13 this quarter and is a key metric accounting for daily rates and occupancy levels. Over the last two years, Marriott’s revenue per room averaged 2% year-on-year growth. Because this number is lower than its revenue growth, we can see its sales from other areas like restaurants, bars, and amenities outperformed its room bookings.

This quarter, Marriott reported modest year-on-year revenue growth of 3.7% but beat Wall Street’s estimates by 0.9%.

Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not lead to better top-line performance yet.

Marriott’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 15.5% over the last two years. This profitability was solid for a consumer discretionary business and shows it’s an efficient company that manages its expenses well.

This quarter, Marriott generated an operating margin profit margin of 18.2%, up 3.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Marriott’s EPS grew at an astounding 51.2% compounded annual growth rate over the last five years, higher than its 13.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q3, Marriott reported adjusted EPS of $2.47, up from $2.26 in the same quarter last year. This print beat analysts’ estimates by 3.5%. Over the next 12 months, Wall Street expects Marriott’s full-year EPS of $9.89 to grow 10.5%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Marriott has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 8.2%, subpar for a consumer discretionary business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Marriott hasn’t been the highest-quality company lately, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 28.3%, splendid for a consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Marriott’s ROIC has increased significantly over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

Marriott reported $700 million of cash and $16 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $5.27 billion of EBITDA over the last 12 months, we view Marriott’s 2.9× net-debt-to-EBITDA ratio as safe. We also see its $738 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Marriott beat analysts’ EPS expectations this quarter. Full-year EPS guidance was also raised slightly. On the other hand, EBITDA guidance was only in line. Zooming out, we think this was a decent quarter. The stock remained flat at $263.80 immediately following the results.

Updated: December 3, 2025 at 10:10 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Marriott, you should also grasp the company’s longer-term business quality and valuation.

Marriott falls short of our quality standards. For starters, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its remarkable EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its revenue per room has disappointed. On top of that, its low free cash flow margins give it little breathing room.

Marriott’s P/E ratio based on the next 12 months is 27.8x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $291.92 on the company (compared to the current share price of $306.62), implying they don’t see much short-term potential in Marriott.