Hilton Hotels Co. Common Stock (NYSE: STAY) and Extended Stay America (NYSE:STAY) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

97.8% of Hilton Hotels Co. Common Stock shares are held by institutional investors. Comparatively, 96.7% of Extended Stay America shares are held by institutional investors. 1.7% of Hilton Hotels Co. Common Stock shares are held by insiders. Comparatively, 0.7% of Extended Stay America shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Hilton Hotels Co. Common Stock and Extended Stay America’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hilton Hotels Co. Common Stock $9.14 billion 2.58 $1.26 billion $2.00 39.47
Extended Stay America $1.28 billion 2.93 $78.84 million $1.00 19.89

Hilton Hotels Co. Common Stock has higher revenue and earnings than Extended Stay America. Extended Stay America is trading at a lower price-to-earnings ratio than Hilton Hotels Co. Common Stock, indicating that it is currently the more affordable of the two stocks.

Dividends

Hilton Hotels Co. Common Stock pays an annual dividend of $0.60 per share and has a dividend yield of 0.8%. Extended Stay America pays an annual dividend of $0.88 per share and has a dividend yield of 4.4%. Hilton Hotels Co. Common Stock pays out 30.0% of its earnings in the form of a dividend. Extended Stay America pays out 88.0% 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 Hotels Co. Common Stock has raised its dividend for 2 consecutive years and Extended Stay America has raised its dividend for 3 consecutive years. Extended Stay America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for Hilton Hotels Co. Common Stock and Extended Stay America, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hilton Hotels Co. Common Stock 0 8 9 1 2.61
Extended Stay America 0 0 9 0 3.00

Hilton Hotels Co. Common Stock currently has a consensus target price of $86.63, suggesting a potential upside of 9.74%. Extended Stay America has a consensus target price of $22.83, suggesting a potential upside of 14.80%. Given Extended Stay America’s stronger consensus rating and higher probable upside, analysts clearly believe Extended Stay America is more favorable than Hilton Hotels Co. Common Stock.

Profitability

This table compares Hilton Hotels Co. Common Stock and Extended Stay America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hilton Hotels Co. Common Stock 15.53% 50.91% 5.23%
Extended Stay America 5.47% 15.18% 4.97%

Volatility and Risk

Hilton Hotels Co. Common Stock has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Extended Stay America has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Summary

Hilton Hotels Co. Common Stock beats Extended Stay America on 12 of the 17 factors compared between the two stocks.

About Hilton Hotels Co. Common Stock

Hilton Worldwide Holdings Inc., a hospitality company, owns, leases, manages, develops, and franchises hotels and resorts. It operates through two segments, Management and Franchise; and Ownership. The company engages in the hotel management and licensing of its brands to franchisees. It operates hotels under the Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Hilton Hotels & Resorts, Curio – A Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton, Tapestry Collection by Hilton, and Hilton Grand Vacations brands. The company operates in North America, South America, and Central America, including all Caribbean nations; Europe, the Middle East, and Africa; and the Asia Pacific. As of July 11, 2018, it had approximately 5,300 properties with approximately 863,000 rooms in 106 countries and territories. Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia.

About Extended Stay America

Extended Stay America, Inc., together with its subsidiaries, owns, operates, and manages hotels in the United States. As of February 27, 2018, it had 599 hotels and approximately 66,000 rooms, as well as managed 26 hotels under the Extended Stay America brand. It serves customers in the mid-priced extended stay segment. The company also relicenses Extended Stay America brand to unaffiliated third parties. Extended Stay America, Inc. was founded in 1995 and is headquartered in Charlotte, North Carolina.

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