Intrinsic value of Marriott International - MAR

Previous Close

$115.02

  Intrinsic Value

$593.65

stock screener

  Rating & Target

str. buy

+416%

  Value-price divergence*

+2553%

Previous close

$115.02

 
Intrinsic value

$593.65

 
Up/down potential

+416%

 
Rating

str. buy

 
Value-price divergence*

+2553%

*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 43.1

 

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
  48.50
  44.15
  40.24
  36.71
  33.54
  30.69
  28.12
  25.81
  23.73
  21.85
  20.17
  18.65
  17.29
  16.06
  14.95
  13.96
  13.06
  12.25
  11.53
  10.88
  10.29
  9.76
  9.28
  8.86
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
Revenue, $m
  17,072
  25,352
  36,545
  51,249
  70,063
  93,562
  122,273
  156,653
  197,079
  243,836
  297,121
  357,043
  423,635
  496,863
  576,645
  662,861
  755,372
  854,028
  958,685
  1,069,213
  1,185,503
  1,307,475
  1,435,081
  1,568,310
  1,707,190
  1,851,786
  2,002,204
  2,158,588
  2,321,119
  2,490,017
  2,665,535
Variable operating expenses, $m
 
  22,626
  32,279
  44,961
  61,188
  81,456
  106,219
  135,872
  170,739
  211,067
  257,025
  307,948
  365,382
  428,541
  497,353
  571,714
  651,504
  736,594
  826,861
  922,191
  1,022,490
  1,127,690
  1,237,749
  1,352,659
  1,472,442
  1,597,155
  1,726,890
  1,861,770
  2,001,952
  2,147,625
  2,299,009
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
  22,626
  32,279
  44,961
  61,188
  81,456
  106,219
  135,872
  170,739
  211,067
  257,025
  307,948
  365,382
  428,541
  497,353
  571,714
  651,504
  736,594
  826,861
  922,191
  1,022,490
  1,127,690
  1,237,749
  1,352,659
  1,472,442
  1,597,155
  1,726,890
  1,861,770
  2,001,952
  2,147,625
  2,299,009
Operating income, $m
  1,368
  2,726
  4,265
  6,287
  8,874
  12,106
  16,053
  20,781
  26,340
  32,769
  40,096
  49,095
  58,252
  68,321
  79,292
  91,147
  103,868
  117,434
  131,825
  147,023
  163,013
  179,785
  197,332
  215,651
  234,748
  254,631
  275,314
  296,818
  319,167
  342,391
  366,526
EBITDA, $m
  1,536
  3,835
  5,528
  7,752
  10,599
  14,153
  18,496
  23,697
  29,813
  36,886
  44,946
  54,011
  64,084
  75,162
  87,230
  100,273
  114,267
  129,191
  145,023
  161,742
  179,334
  197,785
  217,088
  237,242
  258,251
  280,124
  302,878
  326,535
  351,121
  376,670
  403,222
Interest expense (income), $m
  165
  287
  600
  1,024
  1,581
  2,293
  3,183
  4,270
  5,572
  7,103
  8,873
  10,891
  13,160
  15,681
  18,454
  21,475
  24,739
  28,242
  31,978
  35,941
  40,126
  44,529
  49,148
  53,980
  59,024
  64,283
  69,758
  75,454
  81,375
  87,529
  93,925
Earnings before tax, $m
  1,184
  2,439
  3,665
  5,263
  7,293
  9,812
  12,870
  16,511
  20,768
  25,666
  31,223
  38,205
  45,092
  52,640
  60,838
  69,672
  79,128
  89,191
  99,847
  111,082
  122,887
  135,256
  148,184
  161,672
  175,724
  190,348
  205,556
  221,364
  237,792
  254,862
  272,601
Tax expense, $m
  404
  659
  990
  1,421
  1,969
  2,649
  3,475
  4,458
  5,607
  6,930
  8,430
  10,315
  12,175
  14,213
  16,426
  18,811
  21,365
  24,082
  26,959
  29,992
  33,180
  36,519
  40,010
  43,651
  47,445
  51,394
  55,500
  59,768
  64,204
  68,813
  73,602
Net income, $m
  780
  1,781
  2,675
  3,842
  5,324
  7,163
  9,395
  12,053
  15,160
  18,736
  22,793
  27,889
  32,917
  38,427
  44,412
  50,861
  57,764
  65,110
  72,888
  81,090
  89,708
  98,737
  108,174
  118,020
  128,278
  138,954
  150,056
  161,596
  173,588
  186,049
  198,999

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
  34,587
  49,856
  69,916
  95,584
  127,643
  166,811
  213,715
  268,866
  332,655
  405,350
  487,099
  577,946
  677,848
  786,691
  904,312
  1,030,521
  1,165,113
  1,307,893
  1,458,681
  1,617,331
  1,783,731
  1,957,818
  2,139,577
  2,329,045
  2,526,311
  2,731,520
  2,944,867
  3,166,601
  3,397,021
  3,636,474
Adjusted assets (=assets-cash), $m
  23,282
  34,587
  49,856
  69,916
  95,584
  127,643
  166,811
  213,715
  268,866
  332,655
  405,350
  487,099
  577,946
  677,848
  786,691
  904,312
  1,030,521
  1,165,113
  1,307,893
  1,458,681
  1,617,331
  1,783,731
  1,957,818
  2,139,577
  2,329,045
  2,526,311
  2,731,520
  2,944,867
  3,166,601
  3,397,021
  3,636,474
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
  10,470
  15,093
  21,166
  28,936
  38,641
  50,499
  64,698
  81,394
  100,704
  122,711
  147,459
  174,961
  205,204
  238,154
  273,762
  311,968
  352,714
  395,937
  441,585
  489,613
  539,987
  592,688
  647,712
  705,069
  764,788
  826,910
  891,497
  958,622
  1,028,377
  1,100,866
Working capital, $m
  -1,776
  -3,448
  -4,970
  -6,970
  -9,529
  -12,724
  -16,629
  -21,305
  -26,803
  -33,162
  -40,408
  -48,558
  -57,614
  -67,573
  -78,424
  -90,149
  -102,731
  -116,148
  -130,381
  -145,413
  -161,228
  -177,817
  -195,171
  -213,290
  -232,178
  -251,843
  -272,300
  -293,568
  -315,672
  -338,642
  -362,513
Total debt, $m
  8,506
  17,150
  29,259
  45,167
  65,521
  90,944
  122,004
  159,199
  202,934
  253,519
  311,165
  375,992
  448,034
  527,257
  613,569
  706,843
  806,926
  913,658
  1,026,882
  1,146,457
  1,272,266
  1,404,222
  1,542,273
  1,686,408
  1,836,656
  1,993,088
  2,155,818
  2,325,003
  2,500,838
  2,683,561
  2,873,447
Total liabilities, $m
  18,783
  27,427
  39,536
  55,444
  75,798
  101,221
  132,281
  169,476
  213,211
  263,796
  321,442
  386,269
  458,311
  537,534
  623,846
  717,120
  817,203
  923,935
  1,037,159
  1,156,734
  1,282,543
  1,414,499
  1,552,550
  1,696,685
  1,846,933
  2,003,365
  2,166,095
  2,335,280
  2,511,115
  2,693,838
  2,883,724
Total equity, $m
  5,357
  7,159
  10,320
  14,473
  19,786
  26,422
  34,530
  44,239
  55,655
  68,860
  83,907
  100,829
  119,635
  140,315
  162,845
  187,193
  213,318
  241,178
  270,734
  301,947
  334,787
  369,232
  405,268
  442,892
  482,112
  522,946
  565,425
  609,588
  655,486
  703,183
  752,750
Total liabilities and equity, $m
  24,140
  34,586
  49,856
  69,917
  95,584
  127,643
  166,811
  213,715
  268,866
  332,656
  405,349
  487,098
  577,946
  677,849
  786,691
  904,313
  1,030,521
  1,165,113
  1,307,893
  1,458,681
  1,617,330
  1,783,731
  1,957,818
  2,139,577
  2,329,045
  2,526,311
  2,731,520
  2,944,868
  3,166,601
  3,397,021
  3,636,474
Debt-to-equity ratio
  1.588
  2.400
  2.840
  3.120
  3.310
  3.440
  3.530
  3.600
  3.650
  3.680
  3.710
  3.730
  3.750
  3.760
  3.770
  3.780
  3.780
  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
  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
  1,781
  2,675
  3,842
  5,324
  7,163
  9,395
  12,053
  15,160
  18,736
  22,793
  27,889
  32,917
  38,427
  44,412
  50,861
  57,764
  65,110
  72,888
  81,090
  89,708
  98,737
  108,174
  118,020
  128,278
  138,954
  150,056
  161,596
  173,588
  186,049
  198,999
Depreciation, amort., depletion, $m
  168
  1,109
  1,263
  1,465
  1,724
  2,048
  2,443
  2,916
  3,473
  4,117
  4,850
  4,915
  5,832
  6,840
  7,938
  9,125
  10,399
  11,757
  13,198
  14,720
  16,320
  18,000
  19,756
  21,590
  23,502
  25,493
  27,564
  29,717
  31,954
  34,279
  36,696
Funds from operations, $m
  1,405
  2,890
  3,938
  5,307
  7,049
  9,211
  11,838
  14,969
  18,633
  22,853
  27,643
  32,805
  38,749
  45,268
  52,350
  59,986
  68,163
  76,867
  86,086
  95,809
  106,028
  116,736
  127,931
  139,611
  151,781
  164,447
  177,620
  191,312
  205,542
  220,328
  235,695
Change in working capital, $m
  -177
  -1,126
  -1,522
  -2,000
  -2,559
  -3,196
  -3,905
  -4,676
  -5,498
  -6,359
  -7,247
  -8,149
  -9,056
  -9,959
  -10,850
  -11,725
  -12,581
  -13,417
  -14,233
  -15,032
  -15,815
  -16,588
  -17,354
  -18,119
  -18,888
  -19,665
  -20,457
  -21,268
  -22,104
  -22,970
  -23,871
Cash from operations, $m
  1,582
  4,016
  5,461
  7,307
  9,607
  12,407
  15,743
  19,645
  24,131
  29,212
  34,890
  40,954
  47,806
  55,227
  63,200
  71,712
  80,744
  90,284
  100,319
  110,841
  121,844
  133,324
  145,285
  157,730
  170,668
  184,112
  198,077
  212,581
  227,646
  243,299
  259,565
Maintenance CAPEX, $m
  0
  -235
  -349
  -503
  -706
  -965
  -1,288
  -1,683
  -2,157
  -2,713
  -3,357
  -4,090
  -4,915
  -5,832
  -6,840
  -7,938
  -9,125
  -10,399
  -11,757
  -13,198
  -14,720
  -16,320
  -18,000
  -19,756
  -21,590
  -23,502
  -25,493
  -27,564
  -29,717
  -31,954
  -34,279
New CAPEX, $m
  -199
  -3,428
  -4,623
  -6,073
  -7,770
  -9,705
  -11,858
  -14,199
  -16,696
  -19,311
  -22,007
  -24,748
  -27,502
  -30,243
  -32,950
  -35,607
  -38,207
  -40,745
  -43,224
  -45,648
  -48,028
  -50,374
  -52,701
  -55,024
  -57,357
  -59,718
  -62,123
  -64,586
  -67,125
  -69,755
  -72,489
Cash from investing activities, $m
  -2,409
  -3,663
  -4,972
  -6,576
  -8,476
  -10,670
  -13,146
  -15,882
  -18,853
  -22,024
  -25,364
  -28,838
  -32,417
  -36,075
  -39,790
  -43,545
  -47,332
  -51,144
  -54,981
  -58,846
  -62,748
  -66,694
  -70,701
  -74,780
  -78,947
  -83,220
  -87,616
  -92,150
  -96,842
  -101,709
  -106,768
Free cash flow, $m
  -827
  353
  489
  731
  1,131
  1,737
  2,598
  3,763
  5,279
  7,188
  9,526
  12,116
  15,388
  19,151
  23,410
  28,166
  33,412
  39,140
  45,339
  51,995
  59,096
  66,630
  74,584
  82,950
  91,721
  100,892
  110,461
  120,431
  130,804
  141,590
  152,797
Issuance/(repayment) of debt, $m
  2,521
  8,953
  12,109
  15,907
  20,354
  25,423
  31,061
  37,194
  43,735
  50,585
  57,647
  64,827
  72,042
  79,222
  86,312
  93,274
  100,083
  106,732
  113,224
  119,575
  125,809
  131,956
  138,051
  144,135
  150,248
  156,432
  162,730
  169,184
  175,835
  182,723
  189,886
Issuance/(repurchase) of shares, $m
  -534
  571
  485
  310
  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
  9,524
  12,594
  16,217
  20,354
  25,423
  31,061
  37,194
  43,735
  50,585
  57,647
  64,827
  72,042
  79,222
  86,312
  93,274
  100,083
  106,732
  113,224
  119,575
  125,809
  131,956
  138,051
  144,135
  150,248
  156,432
  162,730
  169,184
  175,835
  182,723
  189,886
Total cash flow (excl. dividends), $m
  1,136
  9,877
  13,083
  16,949
  21,486
  27,160
  33,658
  40,957
  49,014
  57,773
  67,173
  76,943
  87,431
  98,374
  109,723
  121,439
  133,495
  145,872
  158,563
  171,570
  184,905
  198,585
  212,635
  227,085
  241,969
  257,324
  273,191
  289,615
  306,640
  324,313
  342,683
Retained Cash Flow (-), $m
  -8,947
  -2,351
  -3,161
  -4,152
  -5,313
  -6,636
  -8,108
  -9,709
  -11,416
  -13,204
  -15,048
  -16,922
  -18,805
  -20,680
  -22,530
  -24,348
  -26,125
  -27,861
  -29,555
  -31,213
  -32,840
  -34,445
  -36,036
  -37,624
  -39,220
  -40,834
  -42,478
  -44,163
  -45,899
  -47,697
  -49,567
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
 
  8,074
  9,923
  12,797
  16,173
  20,524
  25,550
  31,248
  37,597
  44,569
  52,125
  60,021
  68,625
  77,694
  87,192
  97,092
  107,370
  118,011
  129,008
  140,357
  152,065
  164,140
  176,599
  189,461
  202,749
  216,490
  230,713
  245,452
  260,741
  276,616
  293,116
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
 
  7,462
  8,412
  9,870
  11,252
  12,763
  14,062
  15,062
  15,695
  15,924
  15,740
  15,114
  14,207
  13,025
  11,650
  10,165
  8,652
  7,182
  5,811
  4,582
  3,519
  2,629
  1,910
  1,349
  924
  614
  395
  245
  147
  85
  48
Current shareholders' claim on cash, %
  100
  98.5
  97.7
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4
  97.4

Marriott International, Inc. (Marriott International) is a lodging company. Marriott International operates in three business segments: North American Full-Service, North American Limited-Service and International. Its North American Full-Service segment includes its Luxury and Premium brands (JW Marriott, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, and Tribute Portfolio) located in the United States and Canada. Its North American Limited-Service segment includes Select brands (Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Element Hotels and Moxy Hotels) located in the United States and Canada. Its International segment includes JW Marriott, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Four Points, Aloft Hotels, AC Hotels by Marriott, Protea Hotels, Element Hotels, and Moxy Hotels located outside the United States and Canada.

FINANCIAL RATIOS  of  Marriott International (MAR)

Valuation Ratios
P/E Ratio 56.9
Price to Sales 2.6
Price to Book 8.3
Price to Tangible Book
Price to Cash Flow 28.1
Price to Free Cash Flow 32.1
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 48.5% 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 -13.6%. 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 375.025 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 $43.1 billion.

RELATED COMPANIES Price Int.Val. Rating
VAC Marriott Vacat 127.53 75.05  sell
H Hyatt Hotels 61.85 17.18  str.sell
PCLN Priceline Grou 1,942.11 2,160.71  buy
HLT Hilton Worldwi 71.04 129.36  str.buy
CHH Choice Hotels 67.95 9.30  str.sell
WYN Wyndham Worldw 109.00 90.24  hold
IHG InterContinent 53.66 17.88  str.sell
LQ La Quinta Hold 18.11 1.90  str.sell

COMPANY NEWS

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▶ Ciao Roma! W Hotels Sets Its Sights On Italy   [Oct-05-17 10:00AM  PR Newswire]
▶ ILG receives takeover bid from Marriott Vacations   [Oct-03-17 03:55PM  CNBC Videos]
▶ Exclusive: Donohoe, USAA team up on downtown Bethesda acquisition   [12:20PM  American City Business Journals]
▶ StonebridgeCarras sets stage for its $300M Bethesda tower   [Sep-26-17 03:25PM  American City Business Journals]
▶ Did Target's Wage Hike Just Prove Fed Hawks Right Or Wrong?   [12:15PM  Investor's Business Daily]
▶ These 5 Top Hotel, Casino Stocks Are Buys, But Watch Out For This   [Sep-25-17 08:25AM  Investor's Business Daily]
▶ Hotel Investors May Be Ignoring the Airbnb Threat   [Sep-24-17 08:32AM  Motley Fool]
▶ 2017 Skift Global Forum   [Sep-21-17 04:22PM  Yahoo Finance Video]
▶ 2017 Skift Global Forum   [04:17PM  Yahoo Finance Video]
▶ Marriott wants its Wardman Park towels back  no questions asked   [Sep-20-17 11:50AM  American City Business Journals]
▶ Big downtown Denver hotel gets a new brand, new management   [07:03PM  American City Business Journals]
▶ CORRECTION -- The Ritz-Carlton Orlando, Grande Lakes   [Sep-15-17 10:54AM  GlobeNewswire]
▶ Marriott's planned Bethesda HQ will anchor a 1M-square-foot complex   [Sep-01-17 02:50PM  American City Business Journals]
▶ Marriott's new Bethesda HQ will be larger than previously planned   [02:31PM  American City Business Journals]
▶ Marriott and McGarryBowen Chicago embrace 'Golden Rule' together   [Aug-28-17 03:10PM  American City Business Journals]
▶ A Peek At Fidelity's Q2 Top Stock Buys, Sells   [12:33PM  Investor's Business Daily]
▶ Big Island resort to undergo $46M renovation, rebrand to Westin   [Aug-17-17 08:30PM  American City Business Journals]
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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