Stock Analysis on Net

Marriott International Inc. (NASDAQ:MAR)

$22.49

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

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Marriott International Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes experienced significant fluctuations over the period. Initially, there was a slight decrease from 1,097 million US dollars in 2015 to 1,039 million US dollars in 2016. This was followed by a substantial increase in 2017 to 1,463 million US dollars and a notable peak in 2018 at 2,260 million US dollars. However, by 2019, NOPAT declined to 1,577 million US dollars, indicating volatility in operating profitability.
Cost of Capital
The cost of capital remained relatively stable, fluctuating mildly between 14.08% and 15.09% throughout the timeframe. The highest cost of capital was recorded in 2017 at 15.09%, while the lowest was in 2015 at 14.08%. This consistency suggests steady expectations for risk and return over these years.
Invested Capital
Invested capital showed dramatic changes, beginning with 758 million US dollars in 2015 and sharply increasing to 16,537 million US dollars in 2016. After this spike, invested capital gradually decreased over the next three years, reaching 13,992 million US dollars by 2019. The large jump in 2016 indicates a significant investment or acquisition event, followed by a gradual reduction or divestment in subsequent years.
Economic Profit
Economic profit demonstrated considerable volatility with positive and negative values over the period. In 2015, economic profit was strongly positive at 991 million US dollars. It turned negative sharply in 2016 and 2017, with losses of 1,304 and 684 million US dollars, respectively. A recovery occurred in 2018 with a modest positive profit of 121 million US dollars, but this was not sustained, as 2019 again reflected a negative economic profit of 394 million US dollars. This pattern suggests that despite periods of high operating profit, the cost of capital and invested capital dynamics negatively impacted overall value creation.

Net Operating Profit after Taxes (NOPAT)

Marriott International Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income
Deferred income tax expense (benefit)1
Increase (decrease) in accounts receivable reserve2
Increase (decrease) in deferred revenue3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net operating profit after taxes (NOPAT)

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in accounts receivable reserve.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net income.

5 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income.

8 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.


The financial data reflects the company's net income and net operating profit after taxes (NOPAT) over the five-year period from 2015 to 2019.

Net Income
Net income displayed fluctuations during the analyzed period. It began at 859 million US dollars in 2015, experienced a slight decrease to 780 million in 2016, then increased significantly to 1,372 million in 2017. The upward trend continued with a peak at 1,907 million in 2018 before declining to 1,273 million in 2019. This pattern suggests variability in profitability, with a notable peak in 2018 followed by a reduction in the subsequent year.
Net Operating Profit After Taxes (NOPAT)
The NOPAT figures followed a somewhat similar pattern, starting at 1,097 million US dollars in 2015 and slightly decreasing to 1,039 million in 2016. In 2017, NOPAT increased sharply to 1,463 million and continued its upward trajectory to reach the highest value of 2,260 million in 2018. However, in 2019, NOPAT saw a decrease to 1,577 million. The larger magnitude of changes in NOPAT compared to net income indicates that operating profitability experienced more pronounced fluctuations, with a strong peak in 2018.

Overall, the data reveals a pattern of growth in both net income and NOPAT leading up to 2018, followed by a decline in 2019. The significant increase in 2018 suggests a particularly strong operational and financial performance that year, which was not sustained in 2019. This trend may prompt further examination of underlying factors affecting profitability, including operating efficiency, market conditions, or extraordinary items impacting net income.


Cash Operating Taxes

Marriott International Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

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).


Provision for Income Taxes
The provision for income taxes exhibits significant fluctuation over the five-year period. It started at 396 million USD in 2015, increased slightly to 404 million USD in 2016, then surged sharply to 1,464 million USD in 2017. Following this peak, it decreased substantially to 438 million USD in 2018 and further to 326 million USD in 2019. This volatility suggests irregularities potentially related to changes in taxable income, tax strategies, or one-time tax events within the observed period.
Cash Operating Taxes
Cash operating taxes show an upward trend from 315 million USD in 2015 to a peak of 1,691 million USD in 2017. After this peak, cash taxes declined considerably to 626 million USD in 2018 and then decreased slightly to 577 million USD in 2019. The large increase in 2017 followed by a sharp reduction indicates a potential timing difference between accrued tax provisions and actual cash taxes paid, or a resolution of prior period tax liabilities.
Overall Insights
Both provision for income taxes and cash operating taxes demonstrate pronounced variability, especially in 2017, where both metrics reached their highest values within the period. The 2017 spike may reflect extraordinary tax circumstances, such as adjustments for deferred tax liabilities, changes in tax legislation, or significant shifts in pre-tax income figures. The subsequent decreases in 2018 and 2019 suggest normalization or rectification following the exceptional activity in 2017.

Invested Capital

Marriott International Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Current portion of long-term debt
Long-term debt, excluding current portion
Operating lease liability1
Total reported debt & leases
Shareholders’ equity (deficit)
Net deferred tax (assets) liabilities2
Accounts receivable reserve3
Deferred revenue4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Adjusted shareholders’ equity (deficit)
Construction in progress7
Invested capital

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of equity equivalents to shareholders’ equity (deficit).

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction in progress.


Total Reported Debt & Leases

The total reported debt and leases shows a consistent upward trend throughout the period from 2015 to 2019. The amount more than doubled from approximately $4.9 billion in 2015 to roughly $12 billion in 2019. This indicates a significant increase in the company’s leverage and financial obligations over these years.

Shareholders’ Equity (Deficit)

Shareholders’ equity exhibits notable volatility over the period. It started with a deficit of about $3.6 billion in 2015, turned positive to reach a peak of approximately $5.4 billion in 2016, and then gradually declined in subsequent years to a much smaller positive value of around $0.7 billion by the end of 2019. The sharp swing from deficit to surplus and the subsequent erosion suggests fluctuations in net assets, possibly driven by operational performance, capital changes, or valuation adjustments.

Invested Capital

Invested capital experienced substantial growth from 2015 to 2016, jumping from $758 million to over $16.5 billion, reflecting a major change in asset base or capital structure. After this significant increase, the invested capital decreases slightly over the following years, stabilizing near $14 billion by 2019. This pattern indicates a period of considerable investment or acquisition activity followed by a phase of relative stabilization or modest divestment.

Overall Insights

The data suggests an overall increase in leverage with rising debt levels and fluctuating equity, which may point to increased financial risk or strategic financing decisions. The large increase in invested capital followed by a moderate decline could reflect business expansion efforts followed by optimization or consolidation. The reduction in shareholders’ equity after peaking might warrant further investigation into profitability, asset impairments, or dividend policies affecting retained earnings.


Cost of Capital

Marriott International Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

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

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2017-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2016-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2015-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Marriott International Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Airbnb Inc.
Booking Holdings Inc.
Chipotle Mexican Grill Inc.
McDonald’s Corp.
Starbucks Corp.

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


The financial data reveal notable fluctuations in the company's economic profit, invested capital, and economic spread ratio over the five-year period from 2015 to 2019.

Economic Profit
The economic profit experienced a significant decline from a positive 991 million USD in 2015 to a negative 1,304 million USD in 2016. Although there was some recovery in 2018 with a positive economic profit of 121 million USD, the overall trend remained volatile, ending at a negative 394 million USD in 2019. This pattern suggests challenges in generating value above the cost of capital during most years in the period.
Invested Capital
The invested capital showed a substantial increase from 758 million USD in 2015 to 16,537 million USD in 2016, followed by a gradual decline over the next three years, reaching 13,992 million USD by 2019. The sharp rise in invested capital in 2016 indicates a major investment or acquisition activity, with the subsequent years reflecting a stabilization or reduction in invested capital.
Economic Spread Ratio
The economic spread ratio, representing the return spread relative to invested capital, mirrored the volatility seen in economic profit. It decreased sharply from a high positive value of 130.73% in 2015 to a negative 7.89% in 2016. The ratio remained negative through 2017 and 2019, with a brief positive rebound to 0.82% in 2018. This trend reflects difficulties in maintaining returns above the cost of capital, with only a minimal positive spread in 2018.

Overall, the data suggest that the company faced considerable challenges in generating consistent economic profit and positive spread during the period, despite a significant increase in invested capital starting in 2016. The economic spread ratio's persistent negativity in most years signals an ongoing struggle to efficiently leverage capital investments for value creation.


Economic Profit Margin

Marriott International Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1
 
Revenues
Add: Increase (decrease) in deferred revenue
Adjusted revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Airbnb Inc.
Booking Holdings Inc.
Chipotle Mexican Grill Inc.
McDonald’s Corp.
Starbucks Corp.

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).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =

3 Click competitor name to see calculations.


The financial data reveals several notable trends over the five-year period.

Economic Profit
The economic profit demonstrated considerable volatility. It began at a positive 991 million USD in 2015, declined sharply to a negative 1,304 million USD by 2016, and, although it improved marginally, remained negative in subsequent years. In 2017, the economic profit was still negative at -684 million USD, briefly returned to a small positive value of 121 million USD in 2018, but declined again to -394 million USD in 2019. This pattern indicates fluctuating profitability, with challenges in sustaining positive economic returns.
Adjusted Revenues
Adjusted revenues exhibited a predominantly upward trajectory over the period, starting from 14,486 million USD in 2015 and increasing steadily to 22,894 million USD in 2017. However, revenues slightly declined in 2018 to 20,904 million USD and then stabilized around 21,101 million USD in 2019. Overall, the company managed growth in revenues despite some intermittent dips.
Economic Profit Margin
The economic profit margin mirrored the economic profit's volatility. It was positive at 6.84% in 2015 but dropped sharply to -7.64% in 2016. Although there was slight improvement in 2017 to -2.99%, the margin hovered close to zero, turning positive in 2018 at 0.58%, only to fall again to -1.87% in 2019. This trend reflects difficulties in achieving consistent economic profitability relative to revenues.

In summary, while the company experienced growth in adjusted revenues over the observed period, economic profit and its margin reflected instability and challenges in maintaining economic profitability. The data suggests fluctuations in operational efficiency or cost management impacting the bottom-line economic performance despite increasing revenues.