Marriott International, Inc.MARNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $194.65 per share(market-calibrated)

-42.1%

Upside to Fair Value

Current

$335.91

Pure Model

$183.89

Fair Value

$194.65

Bull Case

$210.12

Bear Case

$155.05

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

6.20%

Calibrated Growth

3.80%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $183.89.

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 $153.90/share (19.2x terminal FCF) while exit multiple gives $213.87/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 $335.91, the market implies 6.20% perpetual growth — 320bps 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)84.08%

Debt Weight (D/V)15.92%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (84.08% × 9.45%) + (15.92% × 2.59%)

= 8.36%

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	0.669	0.570	0.448
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%

WACC8.36%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$69.9B

PV of Terminal Value$31.3B

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$47.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$26.7B

PV of Terminal Value$31.3B

Enterprise Value$58.0B

(-) Net Debt$16.7B

Equity Value$41.3B

Shares Outstanding269M

Price per Share$153.90

Exit Multiple Method

PV of Projected FCFs$26.7B

PV of Terminal Value$47.4B

Enterprise Value$74.1B

(-) Net Debt$16.7B

Equity Value$57.4B

Shares Outstanding269M

Price per Share$213.87

Pure Model Fair Value

$183.89

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%
6.36%	$238.43	$249.97	$264.95	$285.16	$313.92
7.36%	$201.98	$208.83	$217.26	$227.87	$241.64
8.36%	$174.24	$178.65	$183.89	$190.19	$197.95
9.36%	$152.01	$155.01	$158.48	$162.54	$167.36
10.36%	$133.57	$135.69	$138.10	$140.86	$144.06

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

$155.05

-53.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.38

Base Case

$183.89

-45.3% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.10

Bull Case

$210.12

-37.4% 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.

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