Diamond Resorts International (NYSE: DRII) and Playa Hotels & Resorts (NASDAQ:PLYA) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Diamond Resorts International and Playa Hotels & Resorts, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diamond Resorts International 0 0 0 0 N/A
Playa Hotels & Resorts 0 1 5 0 2.83

Playa Hotels & Resorts has a consensus target price of $13.45, suggesting a potential upside of 23.85%. Given Playa Hotels & Resorts’ higher possible upside, analysts plainly believe Playa Hotels & Resorts is more favorable than Diamond Resorts International.

Profitability

This table compares Diamond Resorts International and Playa Hotels & Resorts’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diamond Resorts International 10.37% 30.25% 4.88%
Playa Hotels & Resorts -2.38% -1.00% -0.30%

Institutional & Insider Ownership

77.4% of Playa Hotels & Resorts shares are held by institutional investors. 2.7% of Playa Hotels & Resorts shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Diamond Resorts International and Playa Hotels & Resorts’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diamond Resorts International N/A N/A N/A $1.94 15.58
Playa Hotels & Resorts $521.49 million 2.30 $20.21 million ($0.53) -20.49

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

Summary

Playa Hotels & Resorts beats Diamond Resorts International on 5 of the 9 factors compared between the two stocks.

About Diamond Resorts International

Diamond Resorts International, Inc. (DRII) is engaged in the hospitality and vacation ownership industry. The Company operates through two segments: hospitality and management services, and Vacation Interest Sales and Financing. Its hospitality and management services segment manages a network of resort properties and provides services to a member base across the world. Its Vacation Interest sales and financing segment manages over 110 resort properties, as well the Diamond Collections, each of which holds ownership interests in a group of resort properties, (including its managed resorts). The Company sells vacation ownership interests (VOIs) through presentations, which the Company refers to as tours, at its over 60 sales centers, all of which are located at its managed resorts. It has a network of over 380 vacation destinations located in approximately 30 countries throughout the continental United States, Hawaii, Canada, Mexico, Europe, Asia, Australia, New Zealand and Africa.

About Playa Hotels & Resorts

Playa Hotels & Resorts NV is based in the Netherlands and operates hotels and resorts. The Company owns, operates and develops all-inclusive resorts in beachfront locations in vacation destinations in Mexico and the Caribbean. It owns a portfolio consisting of more than 10 resorts located in Mexico, the Dominican Republic and Jamaica. The Company owns and manages Hyatt Zilara and Hyatt Ziva Cancun, Hyatt Ziva and Hyatt Zilara Rose Hall Jamaica, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos. It also owns and operates three resorts under Playa’s brands, THE Royal and Gran Resorts, as well as five resorts in Mexico and the Dominican Republic that are managed by a third party. The Company also offers and organizes weddings and other events in their hotels.

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