VAC
Marriott Vacations Worldwide Corp
Consumer
11/29/2016
Presented
| Date | 11/15/2016 |
| Price | $76.22 |
| Market Cap | $2.11B |
| Ent Value | $2.56B |
| P/E Ratio | 18.55x |
| Book Value | $32.17 |
| Div Yield | 0.02% |
| Shares O/S | 27.68M |
| Ave Daily Vol | 284,229 |
| Short Int | 14.49% |
Current
| Price | $75.02 |
| Market Cap | $2.63B |
| Marriott Vacations Worldwide Corp. focuses on vacation ownership, based on number of owners, number of resorts and revenues. It develops markets, sells and manages vacation ownership and related products. The company operates the business through three segments: North America, Europe and Asia Pacific. The North America segment develops markets, sells and manages vacation ownership products under the marriott vacation club and grand residences by marriott brands in the United States and the Caribbean vacation. The Europe segment focuses on selling its existing projects and managing existing resorts. The Asia Pacific segment develops markets, s and manages vacation ownership products through marriott vacation club and asia pacific regions. Marriott Vacations Worldwide was founded in 1984 and is headquartered in Orlando, FL |
Publicly traded companies mentioned herein: ILG Inc (ILG), Marriott International Inc (MAR), Marriott Vacations Worldwide Corp (VAC)
Highlights
The presenter is long shares of Marriott Vacations Worldwide (VAC), which was spun-off from Marriott in November 2011. The stock is presently trading at ~$74 (as of 11/15/2016) and is roughly $17 below its highs last seen in mid-2015. He was short the timeshare developer and operator up until 3Q 2016 when management cut full year guidance to the low-end of the +4-8% range, but then took the opportunity to flip his position because the focus is now on a positive inflection of sales growth and an acceleration into 2017. VAC also has $6 per share of net cash and $7 per share of vacation ownership receivables on its relatively strong balance sheet. The algorithm is now mid to high single-digit top line growth, and low double-digit EBITDA growth that will result in FCF per share of $6.50 this year on a normalized basis (for a ~10% FCF yield). In addition to liking the company’s strong fundamentals, there is optionality around capital deployment and/ or potential M&A involving ILG following the Marriott/ Starwood deal. Without a deal VAC is likely to trade up to $100 over the next 12-24 months (10x cash flow plus net cash), and in the presenter’s opinion the stock is worth $120+ if the company becomes a target.
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