The coronavirus cases have been continuously rising. On Friday, the United States broke another record and reported 126,480 new cases in a single day. The President-elect Joe Biden has promised to take more proactive steps to curb the spread of the virus…
If there is another round of lockdown, businesses that have already struggled this year in the “new normal” may face an even more difficult time. In particular, the travel industry has been the worst hit due to travel restrictions, and people preferring to stay at home. Will these stocks react to the lockdowns or the prospects of a vaccine.
Companies like Marriott International, Inc. (MAR), Delta Air Lines, Inc. (DAL), Carnival Corporation (CCL), and Hertz Global Holdings, Inc. (HTZ) have faced significant losses so far this year. Even though their stocks surged yesterday on the news about Pfizer’s trial vaccine, the long-term recovery of these companies could be more difficult if another lockdown measure is taken to resist the second wave of the virus. For now, it would be wise to avoid these stocks.
Marriott International, Inc. (MAR)
MAR operates, franchises, and licenses luxury hotels and properties globally. The company runs through The Ritz-Carlton Destination Club, The Ritz-Carlton Residences, Grand Residences by Marriott, and Marriott Vacation Club. The stock has fallen 31.4% so far this year.
The company is facing a penalty of $23.8 million from the UK’s ICO relating to a data breach that affected the privacy of 339 million guests in 2014. The company is facing low occupancy rates due to the spread of the coronavirus and global lockdowns and is attempting to incrementally bring more business by offering a special package for remote workers.
During the third quarter, the company’s net income fell 74% year-over-year to $100 million. The company’s constant dollar RevPAR declined 65.9% worldwide compared to the same period last year.
MAR’s revenue is expected to fall 47.4% during the quarter ended December 2020 and 47.1% in 2020. The company’s EPS is estimated to decline 105.5% in 2020 and at a rate of 7.3% per annum over the next five years.
MAR is rated a “Sell” in our POWR Ratings system, with an “F” in Trade Grade and a “D” in Buy & Hold Grade and Peer Grade. Within the 14-stock Travel – Hotels/Resorts industry, the company is ranked #9.
Delta Air Lines, Inc. (DAL)
DAL offers scheduled air travel for travelers and cargo in the United States and internationally. The company has operations in two segments — airline and refinery. DAL’s stock has lost 46.3% so far this year.
Recently, the company has suspended flights to 16 cities in the United States due to coronavirus-related fears. If the US goes into another lockdown and extends federal travel restrictions, there would be a significant negative impact on the airline industry. The company has also postponed the…
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