Critical Comparison: Choice Hotels International (CHH) and Its Peers

Choice Hotels International (NYSE:CHH) is one of 382 publicly-traded companies in the “Hotels, Restaurants & Leisure” industry, but how does it contrast to its peers? We will compare Choice Hotels International to related companies based on the strength of its valuation, institutional ownership, earnings, profitability, dividends, analyst recommendations and risk.

Dividends

Choice Hotels International pays an annual dividend of $1.15 per share and has a dividend yield of 1.0%. Choice Hotels International pays out 16.2% of its earnings in the form of a dividend. As a group, “Hotels, Restaurants & Leisure” companies pay a dividend yield of 3.3% and pay out 37.2% of their earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations for Choice Hotels International and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Choice Hotels International	3	9	3	0	2.00
Choice Hotels International Competitors	3783	17170	25440	901	2.50

Choice Hotels International currently has a consensus price target of $113.38, indicating a potential upside of 1.99%. As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 60.75%. Given Choice Hotels International’s peers stronger consensus rating and higher probable upside, analysts plainly believe Choice Hotels International has less favorable growth aspects than its peers.

Profitability

This table compares Choice Hotels International and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Choice Hotels International	20.28%	205.69%	10.68%
Choice Hotels International Competitors	2.27%	-40.22%	2.09%

Insider and Institutional Ownership

65.6% of Choice Hotels International shares are owned by institutional investors. Comparatively, 48.6% of shares of all “Hotels, Restaurants & Leisure” companies are owned by institutional investors. 23.9% of Choice Hotels International shares are owned by company insiders. Comparatively, 22.2% of shares of all “Hotels, Restaurants & Leisure” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Choice Hotels International and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Choice Hotels International	$1.60 billion	$369.95 million	15.70
Choice Hotels International Competitors	$3.42 billion	$247.14 million	-146.40

Choice Hotels International’s peers have higher revenue, but lower earnings than Choice Hotels International. Choice Hotels International is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Volatility and Risk

Choice Hotels International has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Choice Hotels International’s peers have a beta of 1.63, suggesting that their average share price is 63% more volatile than the S&P 500.

Summary

Choice Hotels International beats its peers on 8 of the 15 factors compared.

About Choice Hotels International

Choice Hotels International, Inc., together with its subsidiaries, operates as a hotel franchisor in the United States and internationally. It operates through Hotel Franchising & Management and Corporate & Other segments. The company franchises lodging properties under the brand names of Comfort Inn, Comfort Suites, Quality, Clarion, Clarion Pointe, Sleep Inn, Ascend Hotel Collection, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Studios, WoodSpring Suites, Everhome Suites, Cambria Hotels, Radisson Blu, Radisson RED, Radisson, Park Plaza, Country Inn & Suites by Radisson, Radisson Inn & Suites, Park Inn by Radisson, Radisson Individuals, and Radisson Collection. Choice Hotels International, Inc. was founded in 1939 and is headquartered in North Bethesda, Maryland.