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Victoria Saber, Kaitlyn Emerick , Keiarra Ragland, Liliana Welch

Company Valuation November 27, 2012 . Victoria Saber, Kaitlyn Emerick , Keiarra Ragland, Liliana Welch. Marriott International Incorporated . Marriott was founded in 1927 in Washington D.C. Started with a root beer stand Founded: J. Willard Marriott and his wife

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Victoria Saber, Kaitlyn Emerick , Keiarra Ragland, Liliana Welch

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  1. Company Valuation November 27, 2012 Victoria Saber, KaitlynEmerick, KeiarraRagland, Liliana Welch

  2. Marriott International Incorporated • Marriott was founded in 1927 in Washington D.C. • Started with a root beer stand • Founded: J. Willard Marriott and his wife Belief: “Putting people first, pursuing excellence, embracing change, acting with integrity and serving our world” (Hilton worldwide,2011) .

  3. Growth years and Today • Occurred between 1957-1985 • First motor hotel opened • Became a diverse global enterprise • In 1953- stock became public at $10.25/share • Today • Leading lodging company • More than 3,700 properties • Locations span across 74 countries

  4. Industry Marriott is part of the Lodging industry • They produce luxurious places for their guests to stay • This particular industry is global • Therefore it is huge • Very competitive

  5. Competition Industry • Market Cap= 1.34 Billion • Employees: 2.11 thousand • Revenue: 635.27 Million Hilton Worldwide- privately owned • Locations- 91 countries • It has 11 branches • Known globally InterContinental Hotels • Location- 65 countries • Market Cap= 7.31 Billion • Employees: 7,956 • Revenue: 1.80Billion • Net Income: 575.00 Million Accor- Based in Europe • Location- 92 countries • Employees: 143,939 aprx. • Revenue: 7.90 Billion aprx • Net Income: 64.70 Million

  6. Financial Analysis: Efficiency

  7. Leverage

  8. Liquidity

  9. Profitability Ratios

  10. Marriott vs. Industry

  11. Analysis of Firm Riskiness Sources of Risk for Marriott International Inc.

  12. Industry and Market Risk Lodging • Litigation • Worker turnover rate • Soft skills necessary • Insurance • Privacy

  13. ri = rf + ( rm - rf ) ßi = 2.73 +(5) 1.47= 11.3631 Risk Free Rate Market Risk Premium Beta The cost of capital obtained resulted in 11.36%.

  14. Dividend Discount Model Estimating growth from history of dividends

  15. Estimating Growth • Forward Annual Dividend Rate: .52 • g = (-25.35) x (1-(.3875/.55)) = -17.86%. • g = 49.25 x (1-(.3875/.55)) = 14.55%. • Adjusted with Morningstar’s ROE

  16. Discount Dividend Model Marriott is a non-constant growing company Po = .52/(1 + .114) + .569/(1+.114)^2 + .623/(1+.114)^3 Pn = .623/(.114-.095)  23.72/(1+.114)^3  $24.64

  17. Valuation using multiples As of Nov. 23, the stock price was $35.24 Calculating Stock Price using multiples: Marriott EPS = 1.70 and Industry P/E ratio = 20.49 Therefore, 1.70 * 20.49 = $34.833 * As a result $34.83 is lower than the actual price, however, the calculated value is precise.

  18. In Conclusion • Lodging industry feels economic struggle • Not a steady investment • No constant growth • High levels of risk • Marriott must focus on minimizing risk • Creating a steady revenue • Maintain communication on all levels of administration • Strengthen shareholder bond

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