Head-To-Head Analysis: Choice Hotels International (CHH) & La Quinta Holdings (NYSE:LQ)

La Quinta Holdings (NYSE: LQ) and Choice Hotels International (NYSE:CHH) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their profitabiliy, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Valuation and Earnings

This table compares La Quinta Holdings and Choice Hotels International’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
La Quinta Holdings $973.13 million 1.75 $308.98 million $0.34 42.68
Choice Hotels International $915.42 million 3.96 $272.73 million $2.59 24.94

La Quinta Holdings has higher revenue and earnings than Choice Hotels International. Choice Hotels International is trading at a lower price-to-earnings ratio than La Quinta Holdings, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

La Quinta Holdings has a beta of 1.87, suggesting that its share price is 87% more volatile than the S&P 500. Comparatively, Choice Hotels International has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Profitability

This table compares La Quinta Holdings and Choice Hotels International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
La Quinta Holdings 3.91% 8.04% 1.81%
Choice Hotels International 16.05% -45.12% 17.22%

Dividends

Choice Hotels International pays an annual dividend of $0.86 per share and has a dividend yield of 1.3%. La Quinta Holdings does not pay a dividend. Choice Hotels International pays out 33.2% of its earnings in the form of a dividend. Choice Hotels International has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for La Quinta Holdings and Choice Hotels International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
La Quinta Holdings 1 5 3 0 2.22
Choice Hotels International 1 3 2 0 2.17

La Quinta Holdings presently has a consensus price target of $13.21, indicating a potential downside of 8.98%. Choice Hotels International has a consensus price target of $58.75, indicating a potential downside of 9.06%. Given La Quinta Holdings’ stronger consensus rating and higher possible upside, equities analysts plainly believe La Quinta Holdings is more favorable than Choice Hotels International.

Insider and Institutional Ownership

99.2% of La Quinta Holdings shares are held by institutional investors. Comparatively, 49.8% of Choice Hotels International shares are held by institutional investors. 1.3% of La Quinta Holdings shares are held by company insiders. Comparatively, 22.0% of Choice Hotels International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

La Quinta Holdings beats Choice Hotels International on 10 of the 17 factors compared between the two stocks.

La Quinta Holdings Company Profile

La Quinta Holdings Inc. is an owner, operator and franchisor of select-service hotels primarily serving the midscale and upper-midscale sectors under the La Quinta brand. The Company’s segments include owned hotels, franchise and management, and corporate and other. The owned hotels segment is engaged in the operation of owned hotel properties. The franchise and management segment is engaged in various license, franchise and management agreements relating to its owned and franchised hotels. As of December 31, 2016, its portfolio consisted of 888 hotels representing approximately 87,200 rooms located primarily across 48 states in the United States, as well as in Canada, Mexico, Honduras and Colombia, of which 322 hotels were owned and operated, and 566 were franchised. As of December 31, 2016, the Company had a pipeline of 248 franchised hotels in the United States, Mexico, Colombia, Nicaragua, Guatemala, Chile and El Salvador.

Choice Hotels International Company Profile

Choice Hotels International, Inc. is a hotel franchisor. The Company’s segments include Hotel Franchising, SkyTouch Technology and Corporate & Other. It franchises lodging properties under brand names, including Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, Cambria hotels & suites, and Ascend Hotel Collection. The Company had 6,514 hotels open and 775 hotels under construction, awaiting conversion or approved for development, as of December 31, 2016, representing 516,122 rooms open and 62,547 rooms under construction, awaiting conversion or approved for development in 50 states, the District of Columbia and over 40 countries and territories outside the United States. Its domestic franchising operations are conducted through direct franchising relationships, while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.

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