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Is It Too Late To Consider Buying Marriott Vacations Worldwide Corporation (NYSE:VAC)?

Marriott Vacations Worldwide Corporation (NYSE:VAC), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$108 and falling to the lows of US$87.68. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Marriott Vacations Worldwide's current trading price of US$88.58 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Marriott Vacations Worldwide’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Marriott Vacations Worldwide

What's The Opportunity In Marriott Vacations Worldwide?

Good news, investors! Marriott Vacations Worldwide is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.56x is currently well-below the industry average of 18.9x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Marriott Vacations Worldwide’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Marriott Vacations Worldwide generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 37% over the next year, the near-term future seems bright for Marriott Vacations Worldwide. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since VAC is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

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Are you a potential investor? If you’ve been keeping an eye on VAC for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy VAC. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

So while earnings quality is important, it's equally important to consider the risks facing Marriott Vacations Worldwide at this point in time. For instance, we've identified 3 warning signs for Marriott Vacations Worldwide (1 makes us a bit uncomfortable) you should be familiar with.

If you are no longer interested in Marriott Vacations Worldwide, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.