Critical Review: Choice Hotels International (CHH) & Marcus Corporation (The) (MCS)
Choice Hotels International (NYSE: CHH) and Marcus Corporation (The) (NYSE:MCS) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.
This table compares Choice Hotels International and Marcus Corporation (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Choice Hotels International||16.11%||-51.30%||17.25%|
|Marcus Corporation (The)||7.18%||10.78%||4.71%|
This is a summary of recent ratings and recommmendations for Choice Hotels International and Marcus Corporation (The), as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Choice Hotels International||1||4||1||0||2.00|
|Marcus Corporation (The)||0||0||4||0||3.00|
Choice Hotels International currently has a consensus target price of $61.40, suggesting a potential downside of 0.97%. Marcus Corporation (The) has a consensus target price of $37.60, suggesting a potential upside of 46.45%. Given Marcus Corporation (The)’s stronger consensus rating and higher probable upside, analysts plainly believe Marcus Corporation (The) is more favorable than Choice Hotels International.
Choice Hotels International pays an annual dividend of $0.86 per share and has a dividend yield of 1.4%. Marcus Corporation (The) pays an annual dividend of $0.50 per share and has a dividend yield of 1.9%. Choice Hotels International pays out 31.9% of its earnings in the form of a dividend. Marcus Corporation (The) pays out 33.1% 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. Choice Hotels International has increased its dividend for 3 consecutive years and Marcus Corporation (The) has increased its dividend for 5 consecutive years. Marcus Corporation (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Choice Hotels International has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Marcus Corporation (The) has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500.
Earnings and Valuation
This table compares Choice Hotels International and Marcus Corporation (The)’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Choice Hotels International||$950.47 million||3.66||$286.69 million||$2.70||22.96|
|Marcus Corporation (The)||$594.17 million||0.83||$125.32 million||$1.51||17.00|
Choice Hotels International has higher revenue and earnings than Marcus Corporation (The). Marcus Corporation (The) is trading at a lower price-to-earnings ratio than Choice Hotels International, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
50.3% of Choice Hotels International shares are owned by institutional investors. Comparatively, 59.5% of Marcus Corporation (The) shares are owned by institutional investors. 22.0% of Choice Hotels International shares are owned by company insiders. Comparatively, 33.5% of Marcus Corporation (The) shares are owned 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.
Choice Hotels International beats Marcus Corporation (The) on 9 of the 17 factors compared between the two stocks.
About Choice Hotels International
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.
About Marcus Corporation (The)
The Marcus Corporation operates principally in two business segments: Theatres, and Hotels and Resorts. The Theatres segment operates multiscreen motion picture theatres in Wisconsin, Illinois, Ohio, Minnesota, Iowa, North Dakota and Nebraska, and a family entertainment center in Wisconsin. The Hotels and Resorts segment owns and operates hotels and resorts in Wisconsin, Illinois, Oklahoma and Nebraska, and manages hotels, resorts and other properties in Wisconsin, Minnesota, Texas, Nevada, Georgia, Florida and California. As of December 31, 2015, the Company owned or operated 53 movie theatre locations with a total of 668 screens in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. Its owned and operated hotels and resorts include The Pfister Hotel, The Hilton Milwaukee City Center, Hilton Madison at Monona Terrace, The Grand Geneva Resort & Spa, InterContinental Milwaukee, Skirvin Hilton, AC Hotel Chicago Downtown and The Lincoln Marriott Cornhusker Hotel.
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