120 likes | 187 Views
By: Allie Leon. Market Multiple Valuation. Operations. 3900 lodging properties in 72 countries Controls about 10 % of US hotel market and 1% worldwide Made up of 19 brands Adds hotels to system through franchising Minimizes financial leverage and risk Marriott credit card. Forecasting.
E N D
By: Allie Leon Market Multiple Valuation
Operations • 3900 lodging properties in 72 countries • Controls about 10 % of US hotel market and 1% worldwide • Made up of 19 brands • Adds hotels to system through franchising • Minimizes financial leverage and risk • Marriott credit card
Forecasting Steps: • Forecast revenues from estimates of sales growth rates • Forecast EPAT from future EPM expectations • Forecast NEA from estimates of future EATO *realistic, not necessarily conservative **Largely affected by a firms business model and the industry -hotel industry is very competitive - Hard to find exact comparables
1. Estimating Sales Growth -est. growth for MAR is 6% -there is no reason to believe the negative sales growth in 2012 will continue -6% puts Marriott more in line with the competitors in the industry
Return on Net Enterprise Assets (RNEA) RNEA = EPATx Sales_ Sales Avg NEA = EPM x EATO **use EPM and EATO to help forecast can back into an estimation of EPAT and NEA
2. Estimating EPM • Indicates the profit generated by each dollar of sales • Shows efficiency and cost control EPM = EPAT Sales • The higher the EPM the better • affected by gross profit, which will depend on prices and costs • Competition high in the lodging industry so pricing is competitive
Estimating EPM -est. EPM for MAR is 3.79% -Marriott is lower than competitors, no reason to assume Marriott’s numbers are off -therefore did not factor in the industry percents -removed one time items (FS translation) because the expected future value is 0
3. Estimating EATO • Indicates the sales generated by each dollar of NEA • Shows efficiency and use of assets generating sales EATO = Sales_ Avg NEA - Generally more stable that EPM because assets don’t fluctuate as much as revenues
Estimating EATO -est. EATO for MAR is 7.13 -Marriott is consistently above competitors, no reason to assume any different
Forecasting EPAT = sales * ETO est. NEA = sales/EATO est.
Sources • Marriott International, Inc. 2012 Annual Report • Yahoo Finance • NASDQ