Marriott International, Inc.MARNASDAQ
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DCF Valuation
DCF Valuation Summary
Strong Sell
Fair Value: $194.94 per share(market-calibrated)
-41.0%
Upside to Fair Value
Current
$330.47
Pure Model
$184.32
Fair Value
$194.94
Bull Case
$210.64
Bear Case
$155.43
Market Reality Check
Model Terminal Growth
3.00%
Market-Implied Growth
6.15%
Calibrated Growth
3.79%
Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $184.32.
What's Driving This Ratingfor MAR
✓
CapEx already efficient
CapEx at 1.77% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.
⚠
Analyst growth decelerates sharply
Revenue growth drops from 6.71% in Year 1 to -9.05% by Year 5 (per analyst consensus). That's below the 3.00% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.
↔
Perpetuity and exit methods disagree
Perpetuity growth gives $154.45/share (19.3x terminal FCF) while exit multiple gives $214.18/share (29.1x terminal FCF). The 20x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.
🎯
Market pricing in higher long-term growth
To justify $330.47, the market implies 6.15% perpetual growth — 315bps above the model's 3.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.
✓
Strong cash flow conversion
Year 10 FCF/EBITDA conversion of 68.75% indicates efficient cash generation. FCF reaches $3.6B by Year 10 (14.55% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)1.10
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)9.45%
Cost of Debt
Pre-tax Cost of Debt3.39%
Tax Rate23.36%
After-tax Cost of Debt2.59%
Equity Weight (E/V)83.86%
Debt Weight (D/V)16.14%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (83.86% × 9.45%) + (16.14% × 2.59%)
= 8.35%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $27.9B | $29.9B | $27.5B | $24.6B | $25.0B |
| EBIT | $5.4B | $5.8B | $5.4B | $4.8B | $4.9B |
| Tax | $1.3B | $1.4B | $1.3B | $1.1B | $1.1B |
| NOPAT | $4.2B | $4.5B | $4.1B | $3.7B | $3.7B |
| + Depreciation | $474M | $508M | $467M | $417M | $424M |
| - Capex | $495M | $531M | $487M | $436M | $443M |
| - Δ NWC | $176M | $58M | -$274M | -$109M | $73M |
| Free Cash Flow | $4.0B | $4.4B | $4.4B | $3.8B | $3.6B |
| Discount Factor | 0.923 | 0.786 | 0.670 | 0.571 | 0.449 |
| Present Value | $3.7B | $3.4B | $2.9B | $2.1B | $1.6B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$3.6B
Terminal Growth Rate3.00%
WACC8.35%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$70.1B
PV of Terminal Value$31.4B
Exit Multiple Method
Year 10 EBITDA$5.3B
Exit Multiple (EV/EBITDA)20.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$105.8B
PV of Terminal Value$47.5B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$26.8B
PV of Terminal Value$31.4B
Enterprise Value$58.2B
(-) Net Debt$16.7B
Equity Value$41.5B
Shares Outstanding269M
Price per Share$154.45
Exit Multiple Method
PV of Projected FCFs$26.8B
PV of Terminal Value$47.5B
Enterprise Value$74.2B
(-) Net Debt$16.7B
Equity Value$57.5B
Shares Outstanding269M
Price per Share$214.18
Pure Model Fair Value
$184.32
Average of perpetuity growth and exit multiple methods (before market calibration)
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 2.00% | 2.50% | 3.00% | 3.50% | 4.00% |
|---|---|---|---|---|---|
| 6.35% | $239.07 | $250.72 | $265.84 | $286.27 | $315.41 |
| 7.35% | $202.45 | $209.36 | $217.85 | $228.55 | $242.46 |
| 8.35% | $174.62 | $179.05 | $184.32 | $190.67 | $198.49 |
| 9.35% | $152.32 | $155.33 | $158.82 | $162.91 | $167.75 |
| 10.35% | $133.83 | $135.96 | $138.38 | $141.16 | $144.37 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$155.43
-53.0% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.5%
- • Beta: 1.38
Base Case
$184.32
-44.2% vs current
- • Analyst consensus
- • Terminal growth: 3.0%
- • Beta: 1.10
Bull Case
$210.64
-36.3% vs current
- • +25% vs analyst consensus
- • Terminal growth: 3.5%
- • Beta: 0.94
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Cyclical Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth6.71%
Year 3 Revenue Growth1.96%
Year 5 Revenue Growth-9.05%
Year 7 Revenue Growth-4.23%
Year 10 Revenue Growth3.00%
Terminal Growth Rate3.00%
Margin & Efficiency
Current EBIT Margin19.46%
Tax Rate23.36%
Historical Capex / Rev1.77%
NWC / Revenue10.00%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Cyclical sector)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.