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Marriott International Inc. (MAR), one of the world’s largest lodging companies, has approved an additional share repurchase, thereby maintaining the trend of returning wealth to its shareholders from time to time, depending on market conditions.
Under this program, this Maryland-based hotelier has raised its authorization by another 25 million of its common stock leaving a total 34 million shares available for repurchase. The company repurchased 31.2 million shares for $1.2 billion in 2012.
Last week, one of Marriott’s close peers Starwood Hotels & Resorts Worldwide Inc. (HOT) also increased its share repurchase authorization by $500 Million, taking the total amount available under the authorization to about $680 million as of Feb 13, 2013.
The increase in share buyback authorization reflects the company’s confidence in its fundamentals. At the same time, the share buyback activity will help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.
Apart from buyback, Marriott is also committed to a dividend distribution program. Its last dividend hike came in May 2012 when the company hiked its quarterly dividend by 30% and aimed to return $1.1 billion to shareholders in 2012, up from its previous expectation of $1 billion. Marriott is expected to report its fourth quarter 2012 earnings on Feb 19.
Marriott currently carries a Zacks Rank #3 (Hold). Some hotel companies, which are expected to perform well, include The Marcus Corporation (MCS), and Intercontinental Hotels Group plc (IHG) carrying a Zacks Rank #1 (Strong Buy).
STARWOOD HOTELS (HOT): Free Stock Analysis Report