Intrinsic value of Marriott International - MAR

Previous Close

$98.03

  Intrinsic Value

$530.11

stock screener

  Rating & Target

str. buy

+441%

  Value-price divergence*

+5000%

Previous close

$98.03

 
Intrinsic value

$530.11

 
Up/down potential

+441%

 
Rating

str. buy

 
Value-price divergence*

+5000%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MAR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 37.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  17.85
  47.40
  43.16
  39.34
  35.91
  32.82
  30.04
  27.53
  25.28
  23.25
  21.43
  19.78
  18.31
  16.98
  15.78
  14.70
  13.73
  12.86
  12.07
  11.36
  10.73
  10.15
  9.64
  9.18
  8.76
  8.38
  8.04
  7.74
  7.47
  7.22
  7.00
Revenue, $m
  17,072
  25,164
  36,025
  50,199
  68,225
  90,615
  117,833
  150,276
  188,266
  232,041
  281,759
  337,503
  399,284
  467,063
  540,754
  620,243
  705,401
  796,093
  892,191
  993,580
  1,100,167
  1,211,887
  1,328,705
  1,450,620
  1,577,663
  1,709,905
  1,847,448
  1,990,431
  2,139,027
  2,293,444
  2,453,918
Variable operating expenses, $m
 
  22,464
  31,831
  44,056
  59,603
  78,915
  102,390
  130,372
  163,138
  200,894
  243,776
  291,094
  344,380
  402,839
  466,397
  534,956
  608,405
  686,626
  769,510
  856,957
  948,888
  1,045,246
  1,146,001
  1,251,151
  1,360,726
  1,474,783
  1,593,413
  1,716,735
  1,844,899
  1,978,082
  2,116,490
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  15,704
  22,464
  31,831
  44,056
  59,603
  78,915
  102,390
  130,372
  163,138
  200,894
  243,776
  291,094
  344,380
  402,839
  466,397
  534,956
  608,405
  686,626
  769,510
  856,957
  948,888
  1,045,246
  1,146,001
  1,251,151
  1,360,726
  1,474,783
  1,593,413
  1,716,735
  1,844,899
  1,978,082
  2,116,490
Operating income, $m
  1,368
  2,700
  4,194
  6,143
  8,621
  11,700
  15,443
  19,904
  25,128
  31,147
  37,984
  46,408
  54,904
  64,224
  74,357
  85,287
  96,997
  109,467
  122,681
  136,623
  151,279
  166,641
  182,704
  199,468
  216,938
  235,122
  254,034
  273,695
  294,128
  315,361
  337,428
EBITDA, $m
  1,536
  3,807
  5,450
  7,594
  10,321
  13,708
  17,825
  22,733
  28,479
  35,101
  42,622
  51,055
  60,401
  70,654
  81,801
  93,826
  106,708
  120,427
  134,964
  150,301
  166,425
  183,325
  200,996
  219,439
  238,657
  258,661
  279,468
  301,097
  323,576
  346,934
  371,210
Interest expense (income), $m
  165
  287
  593
  1,004
  1,541
  2,224
  3,071
  4,102
  5,331
  6,769
  8,427
  10,309
  12,420
  14,759
  17,326
  20,116
  23,126
  26,350
  29,784
  33,423
  37,262
  41,298
  45,528
  49,952
  54,568
  59,378
  64,386
  69,594
  75,008
  80,634
  86,481
Earnings before tax, $m
  1,184
  2,414
  3,601
  5,138
  7,080
  9,477
  12,371
  15,802
  19,797
  24,378
  29,557
  36,099
  42,484
  49,465
  57,031
  65,171
  73,871
  83,117
  92,897
  103,200
  114,017
  125,343
  137,176
  149,517
  162,370
  175,743
  189,649
  204,102
  219,120
  234,727
  250,946
Tax expense, $m
  404
  652
  972
  1,387
  1,912
  2,559
  3,340
  4,267
  5,345
  6,582
  7,980
  9,747
  11,471
  13,355
  15,398
  17,596
  19,945
  22,442
  25,082
  27,864
  30,785
  33,843
  37,038
  40,370
  43,840
  47,451
  51,205
  55,107
  59,163
  63,376
  67,755
Net income, $m
  780
  1,762
  2,629
  3,751
  5,169
  6,918
  9,031
  11,535
  14,452
  17,796
  21,577
  26,353
  31,013
  36,109
  41,633
  47,575
  53,926
  60,675
  67,815
  75,336
  83,232
  91,501
  100,139
  109,147
  118,530
  128,292
  138,444
  148,994
  159,958
  171,351
  183,191

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  858
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  24,140
  34,330
  49,147
  68,484
  93,076
  123,622
  160,755
  205,015
  256,843
  316,563
  384,392
  460,440
  544,726
  637,194
  737,727
  846,171
  962,348
  1,086,076
  1,217,177
  1,355,497
  1,500,910
  1,653,325
  1,812,695
  1,979,017
  2,152,338
  2,332,749
  2,520,392
  2,715,458
  2,918,182
  3,128,845
  3,347,773
Adjusted assets (=assets-cash), $m
  23,282
  34,330
  49,147
  68,484
  93,076
  123,622
  160,755
  205,015
  256,843
  316,563
  384,392
  460,440
  544,726
  637,194
  737,727
  846,171
  962,348
  1,086,076
  1,217,177
  1,355,497
  1,500,910
  1,653,325
  1,812,695
  1,979,017
  2,152,338
  2,332,749
  2,520,392
  2,715,458
  2,918,182
  3,128,845
  3,347,773
Revenue / Adjusted assets
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
Average production assets, $m
  7,043
  10,393
  14,878
  20,732
  28,177
  37,424
  48,665
  62,064
  77,754
  95,833
  116,367
  139,389
  164,904
  192,897
  223,331
  256,160
  291,331
  328,787
  368,475
  410,348
  454,369
  500,509
  548,755
  599,106
  651,575
  706,191
  762,996
  822,048
  883,418
  947,192
  1,013,468
Working capital, $m
  -1,776
  -2,516
  -3,602
  -5,020
  -6,822
  -9,062
  -11,783
  -15,028
  -18,827
  -23,204
  -28,176
  -33,750
  -39,928
  -46,706
  -54,075
  -62,024
  -70,540
  -79,609
  -89,219
  -99,358
  -110,017
  -121,189
  -132,871
  -145,062
  -157,766
  -170,990
  -184,745
  -199,043
  -213,903
  -229,344
  -245,392
Total debt, $m
  8,506
  16,947
  28,697
  44,031
  63,532
  87,756
  117,201
  152,300
  193,399
  240,758
  294,546
  354,852
  421,691
  495,017
  574,740
  660,737
  752,865
  850,981
  954,944
  1,064,632
  1,179,944
  1,300,810
  1,427,190
  1,559,084
  1,696,527
  1,839,593
  1,988,394
  2,143,081
  2,303,841
  2,470,897
  2,644,507
Total liabilities, $m
  18,783
  27,224
  38,974
  54,308
  73,809
  98,033
  127,478
  162,577
  203,676
  251,035
  304,823
  365,129
  431,968
  505,294
  585,017
  671,014
  763,142
  861,258
  965,221
  1,074,909
  1,190,221
  1,311,087
  1,437,467
  1,569,361
  1,706,804
  1,849,870
  1,998,671
  2,153,358
  2,314,118
  2,481,174
  2,654,784
Total equity, $m
  5,357
  7,106
  10,173
  14,176
  19,267
  25,590
  33,276
  42,438
  53,166
  65,529
  79,569
  95,311
  112,758
  131,899
  152,709
  175,157
  199,206
  224,818
  251,956
  280,588
  310,688
  342,238
  375,228
  409,657
  445,534
  482,879
  521,721
  562,100
  604,064
  647,671
  692,989
Total liabilities and equity, $m
  24,140
  34,330
  49,147
  68,484
  93,076
  123,623
  160,754
  205,015
  256,842
  316,564
  384,392
  460,440
  544,726
  637,193
  737,726
  846,171
  962,348
  1,086,076
  1,217,177
  1,355,497
  1,500,909
  1,653,325
  1,812,695
  1,979,018
  2,152,338
  2,332,749
  2,520,392
  2,715,458
  2,918,182
  3,128,845
  3,347,773
Debt-to-equity ratio
  1.588
  2.380
  2.820
  3.110
  3.300
  3.430
  3.520
  3.590
  3.640
  3.670
  3.700
  3.720
  3.740
  3.750
  3.760
  3.770
  3.780
  3.790
  3.790
  3.790
  3.800
  3.800
  3.800
  3.810
  3.810
  3.810
  3.810
  3.810
  3.810
  3.820
  3.820
Adjusted equity ratio
  0.193
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  780
  1,762
  2,629
  3,751
  5,169
  6,918
  9,031
  11,535
  14,452
  17,796
  21,577
  26,353
  31,013
  36,109
  41,633
  47,575
  53,926
  60,675
  67,815
  75,336
  83,232
  91,501
  100,139
  109,147
  118,530
  128,292
  138,444
  148,994
  159,958
  171,351
  183,191
Depreciation, amort., depletion, $m
  168
  1,106
  1,256
  1,451
  1,699
  2,007
  2,382
  2,829
  3,352
  3,954
  4,639
  4,646
  5,497
  6,430
  7,444
  8,539
  9,711
  10,960
  12,282
  13,678
  15,146
  16,684
  18,292
  19,970
  21,719
  23,540
  25,433
  27,402
  29,447
  31,573
  33,782
Funds from operations, $m
  1,405
  2,868
  3,884
  5,202
  6,868
  8,925
  11,413
  14,364
  17,804
  21,750
  26,215
  30,999
  36,510
  42,539
  49,077
  56,114
  63,637
  71,635
  80,097
  89,014
  98,378
  108,184
  118,430
  129,117
  140,249
  151,832
  163,877
  176,396
  189,405
  202,924
  216,973
Change in working capital, $m
  -177
  -809
  -1,086
  -1,417
  -1,803
  -2,239
  -2,722
  -3,244
  -3,799
  -4,378
  -4,972
  -5,574
  -6,178
  -6,778
  -7,369
  -7,949
  -8,516
  -9,069
  -9,610
  -10,139
  -10,659
  -11,172
  -11,682
  -12,191
  -12,704
  -13,224
  -13,754
  -14,298
  -14,860
  -15,442
  -16,047
Cash from operations, $m
  1,582
  3,677
  4,970
  6,619
  8,670
  11,164
  14,135
  17,608
  21,603
  26,128
  31,187
  36,573
  42,688
  49,317
  56,446
  64,062
  72,153
  80,704
  89,707
  99,153
  109,037
  119,356
  130,112
  141,309
  152,953
  165,056
  177,631
  190,694
  204,265
  218,365
  233,020
Maintenance CAPEX, $m
  0
  -235
  -346
  -496
  -691
  -939
  -1,247
  -1,622
  -2,069
  -2,592
  -3,194
  -3,879
  -4,646
  -5,497
  -6,430
  -7,444
  -8,539
  -9,711
  -10,960
  -12,282
  -13,678
  -15,146
  -16,684
  -18,292
  -19,970
  -21,719
  -23,540
  -25,433
  -27,402
  -29,447
  -31,573
New CAPEX, $m
  -199
  -3,350
  -4,486
  -5,854
  -7,445
  -9,247
  -11,241
  -13,399
  -15,690
  -18,079
  -20,534
  -23,022
  -25,516
  -27,993
  -30,434
  -32,829
  -35,170
  -37,456
  -39,688
  -41,874
  -44,021
  -46,140
  -48,246
  -50,351
  -52,469
  -54,616
  -56,805
  -59,052
  -61,370
  -63,774
  -66,276
Cash from investing activities, $m
  -2,409
  -3,585
  -4,832
  -6,350
  -8,136
  -10,186
  -12,488
  -15,021
  -17,759
  -20,671
  -23,728
  -26,901
  -30,162
  -33,490
  -36,864
  -40,273
  -43,709
  -47,167
  -50,648
  -54,156
  -57,699
  -61,286
  -64,930
  -68,643
  -72,439
  -76,335
  -80,345
  -84,485
  -88,772
  -93,221
  -97,849
Free cash flow, $m
  -827
  92
  138
  270
  534
  978
  1,646
  2,587
  3,844
  5,457
  7,459
  9,672
  12,526
  15,828
  19,582
  23,789
  28,444
  33,537
  39,059
  44,997
  51,338
  58,070
  65,183
  72,666
  80,514
  88,721
  97,286
  106,209
  115,493
  125,144
  135,171
Issuance/(repayment) of debt, $m
  2,521
  8,750
  11,750
  15,334
  19,502
  24,223
  29,446
  35,099
  41,099
  47,358
  53,788
  60,306
  66,839
  73,327
  79,723
  85,996
  92,129
  98,116
  103,964
  109,688
  115,312
  120,865
  126,380
  131,894
  137,443
  143,066
  148,801
  154,687
  160,760
  167,056
  173,610
Issuance/(repurchase) of shares, $m
  -534
  537
  439
  252
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,963
  9,287
  12,189
  15,586
  19,502
  24,223
  29,446
  35,099
  41,099
  47,358
  53,788
  60,306
  66,839
  73,327
  79,723
  85,996
  92,129
  98,116
  103,964
  109,688
  115,312
  120,865
  126,380
  131,894
  137,443
  143,066
  148,801
  154,687
  160,760
  167,056
  173,610
Total cash flow (excl. dividends), $m
  1,136
  9,379
  12,327
  15,855
  20,036
  25,201
  31,092
  37,686
  44,943
  52,815
  61,247
  69,978
  79,365
  89,154
  99,305
  109,785
  120,572
  131,653
  143,023
  154,685
  166,650
  178,935
  191,563
  204,560
  217,957
  231,787
  246,088
  260,896
  276,253
  292,200
  308,781
Retained Cash Flow (-), $m
  -8,947
  -2,298
  -3,067
  -4,003
  -5,091
  -6,323
  -7,686
  -9,162
  -10,728
  -12,362
  -14,041
  -15,742
  -17,447
  -19,141
  -20,810
  -22,448
  -24,049
  -25,612
  -27,138
  -28,632
  -30,100
  -31,550
  -32,990
  -34,429
  -35,877
  -37,345
  -38,842
  -40,379
  -41,964
  -43,607
  -45,318
Prev. year cash balance distribution, $m
 
  549
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,629
  9,260
  11,852
  14,946
  18,878
  23,406
  28,524
  34,215
  40,453
  47,207
  54,236
  61,918
  70,013
  78,494
  87,337
  96,524
  106,042
  115,885
  126,053
  136,550
  147,385
  158,574
  170,131
  182,080
  194,442
  207,245
  220,517
  234,289
  248,593
  263,463
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  7,051
  7,850
  9,142
  10,399
  11,739
  12,881
  13,749
  14,283
  14,454
  14,255
  13,657
  12,818
  11,738
  10,488
  9,144
  7,778
  6,453
  5,220
  4,115
  3,160
  2,361
  1,715
  1,211
  830
  551
  354
  220
  132
  77
  43
Current shareholders' claim on cash, %
  100
  98.4
  97.6
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2

Marriott International, Inc. operates, franchises, and licenses hotels and timeshare properties worldwide. The company operates through three segments: North American Full-Service, North American Limited-Service, and International. It also operates, markets, and develops residential properties, as well as provides services to home/condominium owner associations. The company operates its properties primarily under the brand names of Bulgari, The Ritz-Carlton and The Ritz-Carlton Reserve, St. Regis, W, EDITION, JW Marriott, The Luxury Collection, Marriott Hotels, Westin, Le Méridien, Renaissance Hotels, Sheraton, Delta Hotels by MarriottSM, Marriott Executive Apartments, Marriott Vacation Club, Autograph Collection Hotels, Tribute Portfolio™, Design Hotels™, Gaylord Hotels, Courtyard, Four Points by Sheraton, SpringHill Suites, Fairfield Inn & Suites, Residence Inn, TownePlace Suites, AC Hotels by Marriott, Aloft, Element, Moxy Hotels, and Protea Hotels by Marriott. As of February 15, 2017, it operated, franchised, and licensed approximately 6,000 properties in 122 countries and territories. Marriott International, Inc. was founded in 1971 and is headquartered in Bethesda, Maryland.

FINANCIAL RATIOS  of  Marriott International (MAR)

Valuation Ratios
P/E Ratio 48.5
Price to Sales 2.2
Price to Book 7.1
Price to Tangible Book
Price to Cash Flow 23.9
Price to Free Cash Flow 27.4
Growth Rates
Sales Growth Rate 17.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.8%
Cap. Spend. - 3 Yr. Gr. Rate -7.6%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 153%
Total Debt to Equity 158.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 5.9%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 10.8%
Ret/ On T. Cap. - 3 Yr. Avg. 46.2%
Return On Equity 88.3%
Return On Equity - 3 Yr. Avg. 5.7%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 15.4%
Gross Margin - 3 Yr. Avg. 14.8%
EBITDA Margin 8.9%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 8%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 6.9%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. 5.3%
Effective Tax Rate 34.1%
Eff/ Tax Rate - 3 Yr. Avg. 32.2%
Payout Ratio 47.9%

MAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MAR stock intrinsic value calculation we used $17072 million for the last fiscal year's total revenue generated by Marriott International. The default revenue input number comes from 2016 income statement of Marriott International. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MAR stock valuation model: a) initial revenue growth rate of 47.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.2%, whose default value for MAR is calculated based on our internal credit rating of Marriott International, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Marriott International.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MAR stock the variable cost ratio is equal to 90.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MAR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Marriott International.

Corporate tax rate of 27% is the nominal tax rate for Marriott International. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MAR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MAR are equal to 41.3%.

Life of production assets of 67.3 years is the average useful life of capital assets used in Marriott International operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MAR is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5357 million for Marriott International - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 381.512 million for Marriott International is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Marriott International at the current share price and the inputted number of shares is $37.4 billion.

RELATED COMPANIES Price Int.Val. Rating
VAC Marriott Vacat 110.00 77.49  sell
H Hyatt Hotels 56.01 19.34  str.sell
PCLN Priceline Grou 1,810.00 1,469.07  sell
HLT Hilton Worldwi 61.06 166.52  str.buy
CHH Choice Hotels 60.40 5.61  str.sell
WYN Wyndham Worldw 96.72 58.46  sell
IHG InterContinent 50.52 16.25  str.sell
LQ La Quinta Hold 15.15 1.95  str.sell

COMPANY NEWS

▶ Big Island resort to undergo $46M renovation, rebrand to Westin   [Aug-17-17 08:30PM  American City Business Journals]
▶ What Marriotts Key Metrics Suggest for 2017   [07:36AM  Market Realist]
▶ How Marriott and Alibaba Are Tapping Chinese Tourism   [Aug-08-17 10:25PM  Bloomberg Video]
▶ Marriott's Brand Advantage Continues to Strengthen   [Aug-07-17 11:55PM  Morningstar]
▶ Marriott beats on top line   [04:41PM  CNBC Videos]
▶ Dow To Continue Rally?   [11:11AM  Zacks]
▶ Can the Dow Go for 10 Straight?   [10:01AM  Zacks]
▶ Marriott seeks larger share of Chinese travel market with Alibaba deal   [08:35AM  American City Business Journals]
▶ What Analysts Expect for Marriott in 2Q17   [02:57PM  Market Realist]
▶ Marriott beats Street 2Q forecasts   [09:56AM  Associated Press]
▶ [$$] Hoteliers Start to Mimic AirlinesUh-Oh   [12:46AM  The Wall Street Journal]
▶ Bulls bet on a hotel stock & a big semi name   [Aug-02-17 01:23PM  CNBC Videos]
▶ [$$] Orlando Is Getting a New Hotel Attraction   [Aug-01-17 04:42PM  The Wall Street Journal]
▶ How Hyatts Valuation Compares   [Jul-31-17 09:07AM  Market Realist]
▶ These 3 stocks are poised for a bounce   [08:47AM  CNBC Videos]
▶ Hotel Magnate Bill Marriott Sees Making Room For Innovation As Key   [Jul-22-17 10:26AM  Investor's Business Daily]
▶ WSJ report: Baltimore Marriott Waterfront built with combustible panels   [Jul-13-17 03:15PM  American City Business Journals]
Stock chart of MAR Financial statements of MAR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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