Marriott Vacations (VAC)

Vacation ownership company Marriott Vacations (NYSE:VAC) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 3.2% year on year to $1.26 billion. Its non-GAAP profit of $1.69 per share was 5.6% above analysts’ consensus estimates.

Company Overview

Spun off from Marriott International in 1984, Marriott Vacations (NYSE:VAC) is a vacation company providing leisure experiences for travelers around the world.

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 Vacations's primary competitors include Travel + Leisure (NYSE:TNL), Hilton Grand Vacations (NYSE:HGV), Bluegreen Vacations (NYSE:BXG), Interval Leisure Group (NASDAQ:IILG), and private companies Diamond Resorts and Anantara Vacation Club.

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Marriott Vacations grew its sales at a sluggish 8.9% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis.

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 Vacations’s recent performance shows its demand has slowed as its annualized revenue growth of 3.3% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its number of guests and conducted tours, which clocked in at 1.5 million and 109,609 in the latest quarter. Over the last two years, Marriott Vacations’s guests averaged 1.5% year-on-year declines. On the other hand, its conducted tours averaged 3.7% year-on-year growth.

This quarter, Marriott Vacations missed Wall Street’s estimates and reported a rather uninspiring 3.2% year-on-year revenue decline, generating $1.26 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

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 Vacations’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q3, Marriott Vacations reported adjusted EPS of $1.69, down from $1.80 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.6%. Over the next 12 months, Wall Street expects Marriott Vacations’s full-year EPS of $7.17 to grow 5.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Marriott Vacations has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.5%, lousy 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? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Marriott Vacations historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.9%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

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. Unfortunately, Marriott Vacations’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

Marriott Vacations reported $474 million of cash and $3.53 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 $750 million of EBITDA over the last 12 months, we view Marriott Vacations’s 4.1× net-debt-to-EBITDA ratio as safe. We also see its $164 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 good to see Marriott Vacations beat analysts’ EPS expectations this quarter. On the other hand, its number of conducted tours missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 13% to $58.50 immediately following the results.

Updated: December 4, 2025 at 10:06 PM EST

Before deciding whether to buy Marriott Vacations or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Marriott Vacations 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 spectacular EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its number of conducted tours has disappointed. On top of that, its projected EPS for the next year is lacking.

Marriott Vacations’s P/E ratio based on the next 12 months is 7.9x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $64 on the company (compared to the current share price of $54.74).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.