Last update on 2024-06-07

Marriott (MAR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Marriott (MAR) Piotroski F-Score analysis for 2023. Understand MAR's performance across 9 financial criteria, revealing investment strengths and weaknesses.

Short Analysis - Piotroski Score: 6

We're running Marriott (MAR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measure of a company's financial health, ranging from 0 to 9. Marriott has a score of 6 according to the Piotroski criteria for profitability, liquidity, and efficiency. Marriott excels in profitability with positive net income of $3.083 billion, consistent positive cash flows, an improved Return on Assets (ROA) from 2022 to 2023, and operating cash flows higher than net income. In terms of liquidity, Marriott shows a decline with increased leverage and a decreasing current ratio, indicating a higher dependency on debt and reduced capability to meet short-term liabilities. Additionally, the number of shares has increased, presenting potential risks of share dilution. For operating efficiency, while gross margins slightly decreased from 2022 to 2023, the asset turnover ratio has improved, indicating better use of assets to generate sales.

Insights for Value Investors Seeking Stable Income

Marriott appears to have solid profitability and operational efficiency, reflected in its Piotroski score of 6. However, concerns about increasing leverage, decreasing liquidity, and potential share dilution should be considered. Given the overall decent Piotroski F-Score and strong historical performance, Marriott may be worth considering for investment, conditioned on further investigation into its growing debt and liquidity challenges.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Marriott (MAR)

Company has a positive net income?

Net income is a measure of profitability and indicates whether the company is generating profit or loss. Positive net income is crucial for sustainability and growth.

The net income for Marriott in 2023 is $3.083 billion, which is positive. Over the past 20 years, Marriott's net income has shown resilience, with only two downturns in 2009 and 2020, likely due to broader economic turmoil such as the financial crisis and the COVID-19 pandemic, respectively. Given the recovery and current profitability, this is a good trend. Therefore, Marriott scores 1 point for this criterion.

Company has a positive cash flow?

Cash flow from operations (CFO) indicates the cash a company produces through its regular business operations.

With a Cash Flow from Operations (CFO) of $3,170,000,000 in 2023, Marriott (MAR) has notably positive cash flow. Comparing this to previous years, especially from 2019 onwards, we can see a clear upward trend: $1.685 billion in 2019, $1.639 billion in 2020, $1.177 billion in 2021, and $2.363 billion in 2022. This demonstrates that Marriott's capability to generate cash from core operations has improved significantly. Consequently, this criterion for the Piotroski Analysis merits a score of 1 point. This is a strong indicator of financial health and operational efficiency.

Return on Assets (ROA) are growing?

Change in ROA refers to the variation in Return on Assets over time and indicates how effectively a company is utilizing its assets to generate profit.

Marriott's ROA improved from 0.0936 in 2022 to 0.1221 in 2023. This increasing trend is highly positive as it indicates enhanced profitability and efficiency in using the company's assets. Therefore, for the Piotroski Analysis, Marriott would be awarded 1 point for the positive change in ROA.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income considers if a company is generating strong cash flows relative to its reported earnings, indicating high quality earnings.

For 2023, Marriott's Operating Cash Flow (OCF) was $3,170 million while its Net Income (NI) was $3,083 million. Since the OCF is higher than NI, Marriott adds 1 point for this criterion. This indicates that Marriott is adept at converting its net income into actual cash. Over the past two decades, Marriott's ability to generate strong cash flows has been evident with a generally upward trend in OCF. For instance, in 2003, the OCF was only $421 million, while in recent years it has seen substantial growth, reaching $3,170 million in 2023. Despite fluctuations in net income, particularly notable during the financial crisis in 2009 and the pandemic in 2020 (where net income dropped to negative values), Marriott has managed to maintain robust cash flow operations, emphasizing healthy earning quality.

Liquidity of Marriott (MAR)

Leverage is declining?

The criterion for leverage assesses whether the company has reduced its financial leverage over the measured period.

In 2022, Marriott (MAR) had a leverage ratio of 0.4197, which increased to 0.4755 in 2023, indicating a rise in leverage. This trend is unfavorable under the Piotroski F-Score criteria, as it highlights an increasing dependency on debt financing. Analyzing the historical data over the last 20 years, we see fluctuations in leverage, with notable peaks in 2015 and consistent rises in recent years, except for 2016-2019 period when leverage was relatively stable. The upward trend in 2023 thus suggests a growing reliance on borrowing, impacting financial stability and earning a score of 0 in this category.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. A ratio above 1 is typically preferred.

The Current Ratio for Marriott (MAR) has decreased from 0.4514 in 2022 to 0.4266 in 2023. This is not a positive trend as it indicates a reduction in liquidity, making Marriott less capable of meeting short-term liabilities. Historical data also shows Marriott has consistently had a lower Current Ratio compared to the industry median, which was 1.0195 in 2022 and 0.6974 in 2023. This reduced liquidity could be a potential area of concern.

Number of shares not diluted?

Change in Shares Outstanding is crucial as it affects earnings per share, signals potential dilution, and indicates management actions.

The Outstanding Shares for Marriott increased to 301.5 million in 2023 from 324.4 million in 2022. This increase in shares indicates potential dilution for existing shareholders. Historically, Marriott has had fluctuations in their outstanding shares. Over the past 20 years, the number of shares outstanding has shown variable trends, peaking at certain times, like in 2017, and dropping at others, like between 2018 to 2019. The increase in 2023 is a negative indicator, thus scoring 0 points for this criterion.

Operating of Marriott (MAR)

Cross Margin is growing?

The Change in Gross Margin criterion checks whether the Gross Margin ratio has increased compared to the previous period. It is essential for assessing the improving efficiency and profitability of a company.

The Gross Margin for Marriott (MAR) decreased from 0.2194 in 2022 to 0.2161 in 2023. Despite the slight decrease, the Gross Margin has shown a consistent upward trend over the past two decades. For example, in 2003, the Gross Margin was much lower at 0.0998 and has gradually risen, peaking in 2022. Comparatively, the industry median Gross Margin has always been volatile and, in recent years, showed much higher variability. In conclusion, Marriott receives 0 points for this criterion as the Gross Margin has not increased in 2023; however, the long-term trend has been positive.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in generating sales from its assets, crucial for assessing operational performance.

In 2023, Marriott's Asset Turnover increased to 0.9393 from 0.8248 in 2022. This improvement indicates better asset utilization, a positive sign for operational efficiency. Examining a 20-year trend, Marriott's Asset Turnover peaked at 2.2377 in 2015 but declined sharply to 0.4249 in 2020 due to COVID-19 impacts. The recent increase is a recovery signal. Thus, this criterion scores 1 point.