Critical Survey: La Quinta (LQ) & Boyd Gaming (BYD)

La Quinta (NYSE: LQ) and Boyd Gaming (NYSE:BYD) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Risk and Volatility

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La Quinta has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500. Comparatively, Boyd Gaming has a beta of 1.92, suggesting that its stock price is 92% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for La Quinta and Boyd Gaming, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
La Quinta 0 3 2 0 2.40
Boyd Gaming 0 6 10 0 2.63

La Quinta presently has a consensus price target of $21.25, suggesting a potential upside of 16.18%. Boyd Gaming has a consensus price target of $35.53, suggesting a potential upside of 14.48%. Given La Quinta’s higher probable upside, equities analysts plainly believe La Quinta is more favorable than Boyd Gaming.

Dividends

Boyd Gaming pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. La Quinta does not pay a dividend. Boyd Gaming pays out 12.2% of its earnings in the form of a dividend.

Profitability

This table compares La Quinta and Boyd Gaming’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
La Quinta 15.50% 4.85% 1.19%
Boyd Gaming 7.94% 11.47% 2.54%

Institutional and Insider Ownership

99.1% of La Quinta shares are owned by institutional investors. Comparatively, 74.8% of Boyd Gaming shares are owned by institutional investors. 1.6% of La Quinta shares are owned by insiders. Comparatively, 28.9% of Boyd Gaming shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares La Quinta and Boyd Gaming’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
La Quinta $980.63 million 2.19 $151.96 million $1.29 14.18
Boyd Gaming $2.38 billion 1.47 $189.19 million $1.64 18.93

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

Summary

Boyd Gaming beats La Quinta on 10 of the 16 factors compared between the two stocks.

La Quinta 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.

Boyd Gaming Company Profile

Boyd Gaming Corporation is a multi-jurisdictional gaming company. The Company operated 24 wholly owned gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi, as of December 31, 2016. It operates through three segments: Las Vegas Locals, Downtown Las Vegas, and Midwest and South. It owns and operates a travel agency and a captive insurance company that underwrites travel-related insurance, each located in Hawaii. The Company’s Las Vegas Locals segment includes properties, such as Gold Coast Hotel and Casino, The Orleans Hotel and Casino, and Sam’s Town Hotel and Gambling Hall. The Downtown Las Vegas segment includes three properties, such as California Hotel and Casino Fremont Hotel and Casino and Main Street Station Casino, Brewery and Hotel Street Station. Its Midwest and South segment’s properties include Par-A-Dice Hotel Casino, Diamond Jo Dubuque, Diamond Jo Worth, Kansas Star Casino, Amelia Belle Casino and Evangeline Downs.

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