Choice Hotels International (CHH) and MGM Resorts International (MGM) Financial Review

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Choice Hotels International (NYSE: MGM) and MGM Resorts International (NYSE:MGM) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Choice Hotels International and MGM Resorts International, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Choice Hotels International 2 6 0 0 1.75
MGM Resorts International 0 5 10 0 2.67

Choice Hotels International presently has a consensus target price of $81.14, suggesting a potential upside of 4.16%. MGM Resorts International has a consensus target price of $36.79, suggesting a potential upside of 32.99%. Given MGM Resorts International’s stronger consensus rating and higher probable upside, analysts clearly believe MGM Resorts International is more favorable than Choice Hotels International.

Valuation and Earnings

This table compares Choice Hotels International and MGM Resorts International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Choice Hotels International $1.01 billion 4.38 $114.89 million $2.88 27.05
MGM Resorts International $10.77 billion 1.38 $1.96 billion $1.02 27.12

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

Risk & Volatility

Choice Hotels International has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, MGM Resorts International has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

Dividends

Choice Hotels International pays an annual dividend of $0.86 per share and has a dividend yield of 1.1%. MGM Resorts International pays an annual dividend of $0.48 per share and has a dividend yield of 1.7%. Choice Hotels International pays out 29.9% of its earnings in the form of a dividend. MGM Resorts International pays out 47.1% 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 raised its dividend for 4 consecutive years.

Insider & Institutional Ownership

54.7% of Choice Hotels International shares are owned by institutional investors. Comparatively, 79.9% of MGM Resorts International shares are owned by institutional investors. 22.0% of Choice Hotels International shares are owned by insiders. Comparatively, 12.2% of MGM Resorts International shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Choice Hotels International and MGM Resorts International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Choice Hotels International 14.08% -87.57% 18.88%
MGM Resorts International 17.11% 5.07% 1.92%

Summary

MGM Resorts International beats Choice Hotels International on 11 of the 17 factors compared between the two stocks.

About Choice Hotels International

Choice Hotels International, Inc., together with its subsidiaries, operates as a hotel franchisor worldwide. It operates through Hotel Franchising and SkyTouch Technology segments. The company franchises lodging properties under the brand names of 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. It also develops and markets cloud-based technology products to the hotel industry, including inventory management, pricing, and connectivity to third party channels and hoteliers; and provides onsite and remote installation, training, and phone support services. As of June 19, 2018, the company franchised approximately 6,800 hotels with 550,000 rooms. Choice Hotels International, Inc. was founded in 1939 and is based in Rockville, Maryland.

About MGM Resorts International

MGM Resorts International, through its subsidiaries, owns and operates integrated casino, hotel, and entertainment resorts in the United States and China. The company operates through two segments, Domestic Resorts and MGM China. Its casino resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. Its casino operations include various slots, table games, and race and sports book wagering. The company operates 14 resorts in the United States; and MGM Macau resort and casino in China, as well as develops an integrated casino, hotel, and entertainment resort on the Cotai Strip, Macau. The company also owns and operates Shadow Creek golf course, Primm Valley Golf Club, and Fallen Oak golf course. The company serves premium gaming customers; leisure and wholesale travel customers; business travelers; and group customers, including conventions, trade associations, and small meetings. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

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