The demand for overseas travel has peaked lately, despite geopolitical uncertainties and global economic headwinds. According to the United Nations World Tourism Organization (UNTWO), about 700 million tourists traveled overseas between January and September, more than double the figure for the same time the previous year.
Tourism recovery is on track to reach 65% of pre-pandemic levels by the end of this year. Pent-up leisure travel demand, improved confidence levels, and easing travel rules and restrictions have driven the recovery.
Moreover, holiday reservations are holding steady as consumers accept higher ticket prices this winter despite the mounting household financial difficulties brought on by high inflation and rising energy prices. The travel & tourism market is expected to generate $734.60 billion in revenue in 2022 and grow at a CAGR of 6.7% to reach $1.02 trillion by 2027.
Given this backdrop, it could be wise to invest in fundamentally sound travel stocks Marriott Vacations Worldwide Corporation (VAC), Hilton Grand Vacations Inc. (HGV), and Bluegreen Vacations Holding Corporation (BVH) this holiday season.
Marriott Vacations Worldwide Corporation (VAC)
VAC offers vacation ownership, exchange, rental, resort, and property management, along with connected companies, products, and services. The company creates, markets, and manages products relating to vacation ownership. Its segments include Vacation Ownership and Exchange & Third-Party Management.
On December 1, VAC’s Board of Directors authorized a quarterly cash dividend of $0.72 per share of common stock, a 16% increase over the company’s previous distribution, payable on January 5, 2023, to shareholders of record on December 22, 2022.
“Today’s announcement reflects the confidence in the resiliency of our business model, the strength of our cash flows and belief in our future growth,” said Stephen P. Weisz.
VAC pays a $2.58 per share dividend annually, which translates to a 1.78% yield on the current price. Its dividend payouts have grown at a 13% CAGR over the past five years, while its four-year average dividend yield is 1.27%.
For the fiscal 2022 third quarter ended September 30, 2022, VAC’s total revenue increased 19% year-over-year to $1.25 billion. The company’s income before taxes and non-controlling interest grew 191.4% year-over-year to $169 million. Also, its net income came in at $110 million, a 900% from the previous year’s quarter, while its EPS stood at $2.53, up 1000% year-over-year.
The consensus revenue estimate of $4.68 billion for the current fiscal year (ending December 2022) indicates a 20.3% year-over-year improvement. Likewise, the consensus EPS estimate of $10.30 for the same year reflects a rise of 134% from the prior year. Moreover, VAC has surpassed its EPS in all four trailing quarters, which is impressive.
The stock has gained 17.8% over the past six months to close the last trading session at $134.34.
VAC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Growth. Within the Travel – Hotels/Resorts industry, it is ranked #3 of 22 stocks.
Beyond what we stated above, we also have VAC’s ratings for Value, Quality, Sentiment, Stability, and Momentum. Get all VAC ratings here.
Hilton Grand Vacations Inc. (HGV)
HGV, a timeshare corporation, develops and markets vacation ownership resorts. It operates in two segments, Real Estate Sales and Financing; and Resort Operations and Club Management. It also provides vacation ownership intervals and holiday ownership interests, and finances and services loans for timeshare purchases.
On October 4, HGV announced the inauguration of The Beach Resort Sesoko, a Hilton Club, the second Hilton Grand Vacations resort to open in Japan. The resort is a part of HGV’s ongoing investment in the APAC region and is situated on Sesoko Island. This addition will help HGV boost revenue and expand its business.
For the fiscal 2022 third quarter ended September 30, 2022, HGV’s total revenue increased 20.3% year-over-year to $1.12 billion. Its income before income taxes grew 37.8% from the year-ago value to $204 million. In addition, the company’s net income was $150 million, up 51.5% year-over-year, while its EPS rose 37.8% from the previous year’s quarter to $1.24.
Analysts expect HGV’s EPS of $3.19 for the current fiscal year (ending December 2022), indicating an 82.5% year-over-year improvement. The company’s revenue for the same year is expected to increase 64% from the previous year to $3.83 billion.
Likewise, the company’s EPS and revenue for the next year are expected to increase 23.1% and 4.8% year-over-year to $3.93 and $4.01 billion, respectively. The stock has gained 8% over the past six months to close the last trading session at $39.47.
HGV’s POWR Ratings reflect its strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Value, Quality, and Sentiment. Within the Travel – Hotels/Resorts industry, it is ranked #6 of 22 stocks.
To see additional POWR Ratings for Growth, Stability, and Momentum for HGV, click here.
Bluegreen Vacations Holding Corporation (BVH)
BVH is a vacation ownership organization that manages resorts in both leisure and urban regions and advertises and sells vacation ownership interests (VOI). It also provides financing to qualified VOI buyers and management services for vacation clubs and homeowners’ associations.
On October 12, BVH announced the acquisition of two buildings in Vail, Colorado, the neighborhood of Streamside at Vail Resort, along with a 320-room resort and spa in Panama City Beach, Florida. The corporation may strategically benefit from the upsizing approaches by expanding its operations and business.
For the fiscal 2022 third quarter ended September 30, 2022, BVH’s sales of VOIs increased 44.5% year-over-year to $155.22 million, while its total revenues increased 16.9% from the year-ago value to $250.84 million. Income before income taxes came in at $36.23 million, a 2.7% rise from the previous year’s quarter.
In addition, the company’s net income increased 1.2% year-over-year to $27.65 million, and its EPS stood at $1.19, a 12.3% increase from the prior year’s quarter.
BVH pays a $0.45 per share dividend annually, which translates to a 1.83% yield on the current price. Its dividend payouts have grown at a 32.2% CAGR over the past five years.
The consensus revenue estimate of $899.77 million for the fiscal year (ending December 2022) reflects a rise of 18.8% from the previous year. The consensus EPS estimate of $3.45 for the current year indicates a 19.8% year-over-year increase.
Furthermore, the company’s revenue and EPS for the next year are expected to increase 4.4% and 5.8% year-over-year to $939.49 million and $3.65, respectively. The stock has gained 14.7% over the past month to close the last trading session at $24.19.
BVH’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Sentiment and Value and a B for Quality. Within the same industry, it has topped among 22 stocks.
Click here to see additional ratings of BVH for Stability, Growth, and Momentum.
VAC shares were trading at $131.45 per share on Thursday afternoon, down $2.89 (-2.15%). Year-to-date, VAC has declined -20.76%, versus a -18.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal’s passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor’s degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More…