DCF Studio

    MAR · NMS · Consumer Cyclical

    Marriott International, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 147.16

    Market price

    USD 338.92

    Implied upside

    -56.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 22.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 147.16-56.6%
    Exit multiple
    USD 331.84-2.1%
    Market price
    USD 338.92

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 28.3bnUSD 30.6bnUSD 33.0bnUSD 35.7bnUSD 38.5bn+8.0%
    EBITUSD 4.6bnUSD 4.9bnUSD 5.3bnUSD 5.7bnUSD 6.2bn+8.0%
    NOPATUSD 3.6bnUSD 3.9bnUSD 4.2bnUSD 4.5bnUSD 4.9bn+8.0%
    Add depreciation & amortisationUSD 566.6mUSD 612.1mUSD 661.2mUSD 714.2mUSD 771.5m+8.0%
    Less capital expenditureUSD -622.2mUSD -672.2mUSD -726.1mUSD -784.4mUSD -847.3m+8.0%
    Less increase in working capitalUSD -124.2mUSD -134.2mUSD -145.0mUSD -156.6mUSD -169.2m+8.0%
    Free cashflow to firmUSD 3.4bnUSD 3.7bnUSD 4.0bnUSD 4.3bnUSD 4.7bn+8.0%
    Discount factor0.95450.86960.79230.72190.6577-
    Present valueUSD 3.3bnUSD 3.2bnUSD 3.2bnUSD 3.1bnUSD 3.1bn-1.6%
    Present Value Of The ForecastUSD 15.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.070Reported 1.104, pulled toward 1.0 (Blume)
    Cost of equity10.88%Risk-free + beta x equity risk premium
    Cost of debt5.01%Interest expense / average total debt
    Market capitalisationUSD 88.4bn83.8% of capital
    Total debtUSD 17.1bn16.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.76%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 147.16

    72% of EV

    Forecast FCFF, final year
    USD 4.7bn
    Capex at depreciation, working capital in reinvestment
    USD 4.9bn
    Less reinvestment at g/ROIC (9.5% of NOPAT)
    USD -463.8m
    Capitalised
    USD 4.4bn
    ROIC (reported)
    26.4%
    Terminal value, undiscounted
    USD 62.6bn
    Terminal value, discounted
    USD 41.2bn
    Enterprise value
    USD 57.0bn
    Less net debt
    USD 16.7bn
    Equity value
    USD 40.3bn

    Exit at 20.0x EBITDA

    Value per shareUSD 331.84

    85% of EV

    Terminal value, undiscounted
    USD 139.5bn
    Terminal value, discounted
    USD 91.7bn
    Enterprise value
    USD 107.5bn
    Less net debt
    USD 16.7bn
    Equity value
    USD 90.8bn

    Spread between methods: 77%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.76%194.98208.72225.03244.72268.97
    8.76%159.78169.10179.88192.48207.43
    9.76%133.12139.70147.16155.69165.54
    10.76%112.24117.03122.37128.37135.17
    11.76%95.4499.01102.94107.29112.15

    Outlined: this model. Green text: above today's price of 338.92. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year8.0%25.2%+17.1pp
    EBIT margin16.1%30.7%+14.6pp
    Discount rate9.8%6.2%-3.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.