Comparing Cheesecake Factory (NASDAQ:CAKE) & Hyatt Hotels (NYSE:H)

Hyatt Hotels (NYSE:H) and Cheesecake Factory (NASDAQ:CAKE) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Dividends

Hyatt Hotels pays an annual dividend of $0.60 per share and has a dividend yield of 0.3%. Cheesecake Factory pays an annual dividend of $1.20 per share and has a dividend yield of 1.1%. Hyatt Hotels pays out 73.2% of its earnings in the form of a dividend. Cheesecake Factory pays out 32.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hyatt Hotels has increased its dividend for 1 consecutive years. Cheesecake Factory is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

73.5% of Hyatt Hotels shares are owned by institutional investors. Comparatively, 94.5% of Cheesecake Factory shares are owned by institutional investors. 23.6% of Hyatt Hotels shares are owned by company insiders. Comparatively, 8.0% of Cheesecake Factory shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Hyatt Hotels and Cheesecake Factory, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hyatt Hotels	0	6	9	0	2.60
Cheesecake Factory	2	10	5	1	2.28

Hyatt Hotels currently has a consensus target price of $196.93, indicating a potential upside of 10.84%. Cheesecake Factory has a consensus target price of $81.00, indicating a potential downside of 24.33%. Given Hyatt Hotels’ stronger consensus rating and higher probable upside, analysts clearly believe Hyatt Hotels is more favorable than Cheesecake Factory.

Profitability

This table compares Hyatt Hotels and Cheesecake Factory’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hyatt Hotels	1.10%	7.27%	1.85%
Cheesecake Factory	4.61%	43.97%	6.18%

Valuation and Earnings

This table compares Hyatt Hotels and Cheesecake Factory”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hyatt Hotels	$7.10 billion	2.36	-$52.00 million	$0.82	216.67
Cheesecake Factory	$3.75 billion	1.42	$148.43 million	$3.69	29.01

Cheesecake Factory has lower revenue, but higher earnings than Hyatt Hotels. Cheesecake Factory is trading at a lower price-to-earnings ratio than Hyatt Hotels, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Hyatt Hotels has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

About Hyatt Hotels

Hyatt Hotels Corporation operates as a hospitality company in the United States and internationally. It operates through Owned and Leased Hotels, Americas Management and Franchising, ASPAC Management and Franchising, EAME Management and Franchising, and Apple Leisure Group segments. The company manages, franchises, licenses, owns, and leases portfolio of properties, consisting of full-service hotels and resorts, select service hotels, and other properties, including timeshare, fractional, residential, vacation, and condominium units. It operates its properties under the Park Hyatt, Grand Hyatt, Hyatt Regency, Hyatt, Hyatt vacation Club, Hyatt Place, Hyatt House, Hyatt Studios, UrCove, Miraval, Alila, Andaz, Thompson Hotels, Dream Hotels, Hyatt Centric, Caption by Hyatt, The Unbound Collection by Hyatt, Destination by Hyatt, JdV by Hyatt, Hyatt Ziva, Hyatt Zilara, Zoëtry Wellness & Spa Resorts, Secrets Resorts & Spas, Breathless Resorts & Spas, Dreams Resorts & Spas, Hyatt Vivid Hotel & Resorts, Alua Hotels & Resorts, Sunscape Resorts & Spas, Maison Métier, and The Barnett brand name. The company offers short-term vacation rental platform, Homes & Hideaways by World of Hyatt, that features direct booking for short-term private home rentals in the United States. It primarily serves corporations; national, state, and regional associations; specialty market accounts, including social, government, military, educational, religious, and fraternal organizations; travel agency and luxury organizations; and a group of individual consumers. It also operates World of Hyatt loyalty program, which rewards points that can be redeemed for hotel nights and other rewards. Hyatt Hotels Corporation was founded in 1957 and is headquartered in Chicago, Illinois.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.