Intercontinental Hotels Group (NYSE: IHG) and Starwood Hotels & Resorts Worldwide (NYSE:HOT) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitabiliy, institutional ownership and dividends.

Insider and Institutional Ownership

6.8% of Intercontinental Hotels Group shares are held by institutional investors. Comparatively, 83.5% of Starwood Hotels & Resorts Worldwide shares are held by institutional investors. 0.7% of Starwood Hotels & Resorts Worldwide shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Intercontinental Hotels Group and Starwood Hotels & Resorts Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intercontinental Hotels Group N/A N/A N/A
Starwood Hotels & Resorts Worldwide -2.81% -18.50% -1.83%

Earnings & Valuation

This table compares Intercontinental Hotels Group and Starwood Hotels & Resorts Worldwide’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Intercontinental Hotels Group $1.72 billion 6.22 $757.00 million N/A N/A
Starwood Hotels & Resorts Worldwide N/A N/A N/A $0.48 160.52

Intercontinental Hotels Group has higher revenue and earnings than Starwood Hotels & Resorts Worldwide.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Intercontinental Hotels Group and Starwood Hotels & Resorts Worldwide, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intercontinental Hotels Group 2 5 1 0 1.88
Starwood Hotels & Resorts Worldwide 0 0 0 0 N/A

Intercontinental Hotels Group currently has a consensus target price of $44.00, indicating a potential downside of 21.88%. Given Intercontinental Hotels Group’s higher possible upside, analysts plainly believe Intercontinental Hotels Group is more favorable than Starwood Hotels & Resorts Worldwide.

Risk & Volatility

Intercontinental Hotels Group has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Starwood Hotels & Resorts Worldwide has a beta of 1.99, indicating that its stock price is 99% more volatile than the S&P 500.

Dividends

Intercontinental Hotels Group pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Starwood Hotels & Resorts Worldwide pays an annual dividend of $1.50 per share and has a dividend yield of 1.9%. Starwood Hotels & Resorts Worldwide pays out 312.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Intercontinental Hotels Group has increased its dividend for 4 consecutive years and Starwood Hotels & Resorts Worldwide has increased its dividend for 7 consecutive years. Starwood Hotels & Resorts Worldwide is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Intercontinental Hotels Group beats Starwood Hotels & Resorts Worldwide on 7 of the 12 factors compared between the two stocks.

About Intercontinental Hotels Group

InterContinental Hotels Group PLC is a hotel company. The Company franchises its brands to, and manages hotels on behalf of, third-party hotel owners. Its segments include The Americas; Europe; Asia, Middle East and Africa (AMEA); Greater China, and Central. It operates a portfolio of hotel brands, including InterContinental, HUALUXE, Kimpton, Crowne Plaza, Hotel Indigo, EVEN Hotels, Holiday Inn, Holiday Inn Express, Staybridge Suites Hotels, Holiday Inn Resort, Holiday Inn Club Vacations and Candlewood Suites Hotels. As of December 31, 2016, The Americas pipeline totaled 945 hotels (102,451 rooms). As of December 31, 2016, the Europe pipeline totaled 137 hotels (23,954 rooms). As of December 31, 2016, the AMEA pipeline totaled 149 hotels (39,643 rooms). As of December 31, 2016, the Greater China pipeline totaled 239 hotels (64,028 rooms). As of April 21, 2017, it had 5,200 hotels and 777,000 rooms in its system. As of April 21, 2017, it operated in over 100 countries globally.

About Starwood Hotels & Resorts Worldwide

Starwood Hotels & Resorts Worldwide, LLC, formerly Starwood Hotels & Resorts Worldwide, Inc., is a hotel and leisure company. The Company’s hotel business is focused on the global operation of hotels and resorts primarily in the luxury and upper upscale segments of the lodging industry. The Company manages and operates its hotel business in three hotel segments: the Americas; Europe, Africa and the Middle East (EAME), and Asia Pacific. Its vacation ownership and residential business is a separate segment. The Company conducts its hotel and leisure business both directly and through its subsidiaries. It owns Starwood Vacation Ownership, Inc., a provider of vacation experiences through villa-style resorts and access to Starwood brands. The Starwood Preferred Guest program is its traveler, customer loyalty and multi-brand marketing program. The Company also develops, owns and operates vacation ownership resorts, and markets and sells the vacation ownership Interests in the resorts.

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