Over the past six months, Marriott’s shares (currently trading at $265.40) have posted a disappointing 8% loss, well below the S&P 500’s 5.2% gain. This may have investors wondering how to approach the situation.

Is now the time to buy Marriott, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Even with the cheaper entry price, we don't have much confidence in Marriott. Here are three reasons why you should be careful with MAR and a stock we'd rather own.

We can better understand Travel and Vacation Providers companies by analyzing their RevPAR, or revenue per available room. This metric accounts for daily rates and occupancy levels, painting a holistic picture of Marriott’s demand characteristics.

Marriott’s RevPAR came in at $136 in the latest quarter, and over the last two years, its year-on-year growth averaged 3.1%. This performance was underwhelming and suggests it might have to invest in new amenities such as restaurants and bars to attract customers - this isn’t ideal because expansions can complicate operations and be quite expensive (i.e., renovations and increased overhead).

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Marriott’s revenue to rise by 4.6%, close to its 8.9% annualized growth for the past five years. This projection is underwhelming and suggests its newer products and services will not accelerate its top-line performance yet.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Marriott has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 8.7%, subpar for a consumer discretionary business.

Marriott isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 25.1× forward P/E (or $265.40 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward one of our top software and edge computing picks.

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