Is Marriott Vacations (VAC) a Buy After a 17.85% Post-Earnings Plunge?

The stock market is a theater of extremes, and Marriott Vacations (VAC) has just taken center stage with a 17.85% post-earnings freefall. Investors are left scratching their heads: Is this a buying opportunity for value hunters, or a warning shot from a company struggling to adapt? Let's dissect the numbers, management's roadmap, and the broader industry headwinds to determine whether VAC's sharp decline is a chance to buy into a turnaround story or a cautionary tale.

The Earnings Shock: A Tale of Two Metrics

Marriott Vacations' Q3 2025 earnings report was a mixed bag. While earnings per share (EPS) of $1.69 beat expectations by 3.05%Investing.com Earnings Call Transcript, revenue fell short by 3.82%, landing at $1.26 billion instead of the projected $1.31 billionInvesting.com Earnings Call Transcript. The company's net loss of $2 million and 3% year-over-year revenue declineSimplyWall Street News sent shockwaves through the market. Contract sales dropped 4% in key markets like Orlando and MauiInvesting.com Earnings Call Transcript, and adjusted EBITDA plummeted 15% to $170 millionInvesting.com Earnings Call Transcript. The stock's 17.85% plunge reflects a market that's lost patience with near-term underperformance.

But here's the rub: EBITDA guidance for 2025 was revised downward to $740–$755 millionInvesting.com Earnings Call Transcript, a range that still implies $175 million in annualized EBITDA. For value investors, the question becomes whether this number can be meaningfully improved through management's modernization program.

Management's Modernization Play: A $200M EBITDA Lifeline by 2026

CEO John Geller has laid out a clear path: a modernization initiative targeting $150–$200 million in adjusted EBITDA benefits by 2026SimplyWall Street News. This isn't just a numbers game-it's a strategic pivot to address margin compression and operational inefficiencies. The program includes product enhancements, digital transformation, and cost optimization, all aimed at reversing the 3% year-over-year revenue declineInvesting.com Earnings Call Transcript.

The key here is timing. If the modernization program delivers as promised, VAC could see a meaningful EBITDA rebound by late 2026. But investors must ask: Can management execute this turnaround in a sector increasingly disrupted by flexible travel options like Airbnb? The vacation ownership industry is facing a structural shift, and VAC's high debt load-7.56x debt-to-EBITDASimplyWall Street News-leaves little room for error.

Analyst Price Targets: A Split in Sentiment

Analysts are divided. The average one-year price target of $93.13Goldman Sachs Analysis implies a 99% upside from VAC's recent close of $46.78. However, Citizens Jmp's cut to $60MarketBeat Alert-a 25% upside-signals caution. The divergence reflects a tug-of-war between long-term brand strength (Marriott, Sheraton, Westin affiliationsSimplyWall Street News) and near-term operational struggles.

Goldman Sachs, for instance, maintains a "sell" ratingGoldman Sachs Analysis, citing over-leverage and cyclicality risks. Meanwhile, the put/call ratio of 0.78Goldman Sachs Analysis suggests retail investors remain bullish. For value investors, this split in sentiment creates an opportunity to assess whether the market is overreacting to short-term pain or underestimating the company's long-term potential.

Valuation Metrics: Bargain or Trap?

VAC's P/E ratio of 10.63SimplyWall Street News is a stark discount to the hospitality industry average of 31.6x, making it appear undervalued at first glance. However, the company's debt-to-equity ratio of 2.2SimplyWall Street News and 7.56x debt-to-EBITDASimplyWall Street News are red flags. These metrics highlight a balance sheet that's vulnerable to interest rate hikes and economic downturns.

The modernization program could alleviate some of this risk, but it's not a magic wand. VAC's competitive moat-built on high switching costs for timeshare owners and premium brand partnershipsSimplyWall Street News-is real, but it's being challenged by asset-light competitors. The vacation ownership sector's 57% revenue growth projection for 2025Goldman Sachs Analysis is encouraging, but VAC's own revenue forecast of $5.279 billionMarketBeat Alert includes a 2–3% contraction in contract salesInvesting.com Earnings Call Transcript.

The Bottom Line: Buy, Wait, or Walk?

For value investors, VAC's post-earnings plunge offers a test of discipline. The stock's 42.5% year-to-date declineTradingView Article and 49.4% drop from its 52-week highTradingView Article suggest the market is pricing in worst-case scenarios. If management can deliver on its $150–$200 million EBITDA uplift by 2026SimplyWall Street News, the stock could rebound. But the high debt load and industry headwinds mean this is a high-risk, high-reward proposition.

In the end, VAC's story hinges on execution. If the modernization program hits its marks and the company navigates the debt burden, this could be a golden opportunity. But for those who can't stomach the volatility, patience-or a pass-might be the wiser play.