Hilton Worldwide Holdings (NYSE: HLT) and Starwood Hotels & Resorts Worldwide (NYSE:HOT) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
Hilton Worldwide Holdings 7.12% 42.78% 4.69%
Starwood Hotels & Resorts Worldwide -2.81% -18.50% -1.83%

Risk & Volatility

Hilton Worldwide Holdings has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Starwood Hotels & Resorts Worldwide has a beta of 1.99, suggesting that its stock price is 99% more volatile than the S&P 500.

Earnings & Valuation

This table compares Hilton Worldwide Holdings and Starwood Hotels & Resorts Worldwide’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hilton Worldwide Holdings $7.39 billion 2.94 $2.78 billion $0.13 515.45
Starwood Hotels & Resorts Worldwide N/A N/A N/A $0.48 160.52

Hilton Worldwide Holdings has higher revenue and earnings than Starwood Hotels & Resorts Worldwide. Starwood Hotels & Resorts Worldwide is trading at a lower price-to-earnings ratio than Hilton Worldwide Holdings, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

99.3% of Hilton Worldwide Holdings shares are held by institutional investors. Comparatively, 83.5% of Starwood Hotels & Resorts Worldwide shares are held by institutional investors. 1.5% of Hilton Worldwide Holdings shares are held by company insiders. Comparatively, 0.7% of Starwood Hotels & Resorts Worldwide shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Hilton Worldwide Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Starwood Hotels & Resorts Worldwide pays an annual dividend of $1.50 per share and has a dividend yield of 1.9%. Hilton Worldwide Holdings pays out 461.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Hilton Worldwide Holdings has raised its dividend for 7 consecutive years. Starwood Hotels & Resorts Worldwide is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Hilton Worldwide Holdings and Starwood Hotels & Resorts Worldwide, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hilton Worldwide Holdings 1 5 11 0 2.59
Starwood Hotels & Resorts Worldwide 0 0 0 0 N/A

Hilton Worldwide Holdings currently has a consensus price target of $70.79, suggesting a potential upside of 5.59%. Given Hilton Worldwide Holdings’ higher probable upside, equities analysts clearly believe Hilton Worldwide Holdings is more favorable than Starwood Hotels & Resorts Worldwide.

Summary

Hilton Worldwide Holdings beats Starwood Hotels & Resorts Worldwide on 9 of the 13 factors compared between the two stocks.

About Hilton Worldwide Holdings

Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company’s segments include ownership, and management and franchise. Its global portfolio of owned and leased properties includes a range of hotels in gateway cities, such as New York City, London, San Francisco, Chicago, Sao Paolo and Tokyo. The Company’s management and franchise segment manages hotels and licenses its brands to franchisees. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories.

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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