Buyback Wednesdays – Marriott Announces An Additional 25 Million Share Repurchase Plan

Buyback activity slowed down last week with 28 companies announcing stock buybacks compared to 42 in the prior week. This week saw some huge buybacks announced by well-known giants. The $20 billion buyback announced by Walmart (WMT), representing around 5.3% of its market cap at announcement was the highest in dollars terms. The other significant announcements that failed to make it to the top 5 were the $4 billion buyback by Thermo Fisher Scientific  (TMO) and the $1.5 billion buyback by Steel Dynamics (STLD), which represent around 2% and 9% of their market caps at announcement respectively.

It is interesting to note that both the leading hospitality brands announced stock buybacks this week. Marriott International (MAR) approved an additional repurchase of 25 million shares while Hilton Worldwide Holdings (HLT) announced a $2.5 billion additional share repurchase plan.

Marriott International (MAR) $161.77

Marriott operates 30 brands and 8,000+ properties across 139 countries and territories. The company is returning value to shareholders through both share repurchases and dividends. The company had suspended its 48 cents per share quarterly dividend during the pandemic and resumed payments again this year. It started the year with a 30 cents per share quarterly dividend and this quarter bumped it up to 40 cents a quarter. Marriott has bought back around 8% of its shares outstanding since 2018. The stock has bucked the general market trend and is up almost 4% over the last year.

After witnessing a significant drop during the pandemic, Marriott’s stock is now above pre-pandemic levels. While trailing twelve months revenue of $5 billion hasn’t reached pre-crisis levels, Marriott is more profitable than before the pandemic. Its gross profit margin of 79% and net income margin of 43.72% are the highest in two decades. Year-over-year revenue growth of 72.75% is high compared to Hilton’s (HLT) 67.53% and Airbnb’s (ABNB) 50.97%, although Airbnb’s forward revenue growth of 40.50% surpasses both Marriott and Hilton. Some of this growth is a bounce back from pandemic suppressed demand and is unlikely to continue at the same pace.

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