Stock Analysis on Net

Marriott International Inc. (NASDAQ:MAR)

This company has been moved to the archive! The financial data has not been updated since May 11, 2020.

Dividend Discount Model (DDM) 

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.


Intrinsic Stock Value (Valuation Summary)

Marriott International Inc., dividends per share (DPS) forecast

US$

Microsoft Excel
Year Value DPSt or Terminal value (TVt) Calculation Present value at 16.50%
0 DPS01 1.85
1 DPS1 3.05 = 1.85 × (1 + 65.04%) 2.62
2 DPS2 4.65 = 3.05 × (1 + 52.26%) 3.43
3 DPS3 6.48 = 4.65 × (1 + 39.49%) 4.10
4 DPS4 8.22 = 6.48 × (1 + 26.71%) 4.46
5 DPS5 9.36 = 8.22 × (1 + 13.94%) 4.36
5 Terminal value (TV5) 416.52 = 9.36 × (1 + 13.94%) ÷ (16.50%13.94%) 194.10
Intrinsic value of Marriott International Inc. common stock (per share) $213.07
Current share price $82.31

Based on: 10-K (reporting date: 2019-12-31).

1 DPS0 = Sum of the last year dividends per share of Marriott International Inc. common stock. See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.67%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of Marriott International Inc. common stock βMAR 1.30
 
Required rate of return on Marriott International Inc. common stock3 rMAR 16.50%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rMAR = RF + βMAR [E(RM) – RF]
= 4.67% + 1.30 [13.79%4.67%]
= 16.50%


Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Marriott International Inc., PRAT model

Microsoft Excel
Average Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Dividends 612 543 482 374 253
Net income 1,273 1,907 1,372 780 859
Revenues 20,972 20,758 22,894 17,072 14,486
Total assets 25,051 23,696 23,948 24,140 6,082
Shareholders’ equity (deficit) 703 2,225 3,731 5,357 (3,590)
Financial Ratios
Retention rate1 0.52 0.72 0.65 0.52 0.71
Profit margin2 6.07% 9.19% 5.99% 4.57% 5.93%
Asset turnover3 0.84 0.88 0.96 0.71 2.38
Financial leverage4 35.63 10.65 6.42 4.51
Averages
Retention rate 0.62
Profit margin 6.35%
Asset turnover 1.15
Financial leverage 14.30
 
Dividend growth rate (g)5 65.04%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

1 Retention rate = (Net income – Dividends) ÷ Net income
= (1,273612) ÷ 1,273
= 0.52

2 Profit margin = 100 × Net income ÷ Revenues
= 100 × 1,273 ÷ 20,972
= 6.07%

3 Asset turnover = Revenues ÷ Total assets
= 20,972 ÷ 25,051
= 0.84

4 Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= 25,051 ÷ 703
= 35.63

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.62 × 6.35% × 1.15 × 14.30
= 65.04%


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ($82.31 × 16.50%$1.85) ÷ ($82.31 + $1.85)
= 13.94%

where:
P0 = current price of share of Marriott International Inc. common stock
D0 = the last year dividends per share of Marriott International Inc. common stock
r = required rate of return on Marriott International Inc. common stock


Dividend growth rate (g) forecast

Marriott International Inc., H-model

Microsoft Excel
Year Value gt
1 g1 65.04%
2 g2 52.26%
3 g3 39.49%
4 g4 26.71%
5 and thereafter g5 13.94%

where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 65.04% + (13.94%65.04%) × (2 – 1) ÷ (5 – 1)
= 52.26%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 65.04% + (13.94%65.04%) × (3 – 1) ÷ (5 – 1)
= 39.49%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 65.04% + (13.94%65.04%) × (4 – 1) ÷ (5 – 1)
= 26.71%