Latest Developments:
Marriott International (MAR) reported $6.4 billion in revenue for 2Q24, a 6% year-on-year increase, with a 4.9% global RevPAR rise. Despite these positive results, operating and net margins slightly deteriorated, and there was a slight increase in G&A expenses. The company expects global RevPAR to grow 3% to 4% in FY2024, but faces challenges in the U.S. due to weak consumer sentiment. Marriott also anticipates weaker 4Q24 results due to the U.S. elections impacting group bookings.

Investment Case:
While the global hospitality market remains strong, particularly in Europe and Asia Pacific, Marriott faces short-term challenges. The company's stock has surged 19% YTD, but its valuation appears stretched with a price-to-earnings ratio of 26.56x, implying growth expectations that may be difficult to meet. Although Marriott is well-positioned to benefit from a recovery in China, its current share price reflects overly optimistic assumptions about future growth, particularly in the U.S. and China.

Company's Valuation:
Our valuation suggests Marriott's share price is overvalued, with an implied price of $106.75 based on current growth assumptions. Achieving the current share price would require Marriott to grow at significantly higher rates than historical performance. A more realistic outlook suggests that investors should wait for a better entry point.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Interested parties may check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.