Marcus Corporation (The) (NYSE: MCS) and Extended Stay America (NYSE:STAY) are both hotels & motels companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares Marcus Corporation (The) and Extended Stay America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marcus Corporation (The) 6.51% 9.73% 4.15%
Extended Stay America 5.83% 14.53% 4.74%

Dividends

Marcus Corporation (The) pays an annual dividend of $0.50 per share and has a dividend yield of 1.9%. Extended Stay America pays an annual dividend of $0.84 per share and has a dividend yield of 5.0%. Marcus Corporation (The) pays out 36.0% of its earnings in the form of a dividend. Extended Stay America pays out 215.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Marcus Corporation (The) has raised its dividend for 2 consecutive years and Extended Stay America has raised its dividend for 5 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 current ratings for Marcus Corporation (The) and Extended Stay America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marcus Corporation (The) 0 0 4 0 3.00
Extended Stay America 0 1 7 0 2.88

Marcus Corporation (The) currently has a consensus target price of $35.67, suggesting a potential upside of 35.10%. Extended Stay America has a consensus target price of $20.53, suggesting a potential upside of 22.14%. Given Marcus Corporation (The)’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Marcus Corporation (The) is more favorable than Extended Stay America.

Institutional and Insider Ownership

59.3% of Marcus Corporation (The) shares are held by institutional investors. 33.5% of Marcus Corporation (The) shares are held by insiders. Comparatively, 0.5% 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 is poised for long-term growth.

Risk & Volatility

Marcus Corporation (The) has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Extended Stay America has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Earnings & Valuation

This table compares Marcus Corporation (The) and Extended Stay America’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Marcus Corporation (The) $543.86 million 1.35 $37.90 million $1.39 18.99
Extended Stay America $1.27 billion 2.54 $69.93 million $0.39 43.10

Extended Stay America has higher revenue and earnings than Marcus Corporation (The). Marcus Corporation (The) is trading at a lower price-to-earnings ratio than Extended Stay America, indicating that it is currently the more affordable of the two stocks.

Summary

Extended Stay America beats Marcus Corporation (The) on 9 of the 17 factors compared between the two stocks.

About Marcus Corporation (The)

The Marcus Corporation operates principally in two business segments: Theatres, and Hotels and Resorts. The Theatres segment operates multiscreen motion picture theatres in Wisconsin, Illinois, Ohio, Minnesota, Iowa, North Dakota and Nebraska, and a family entertainment center in Wisconsin. The Hotels and Resorts segment owns and operates hotels and resorts in Wisconsin, Illinois, Oklahoma and Nebraska, and manages hotels, resorts and other properties in Wisconsin, Minnesota, Texas, Nevada, Georgia, Florida and California. As of December 31, 2015, the Company owned or operated 53 movie theatre locations with a total of 668 screens in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. Its owned and operated hotels and resorts include The Pfister Hotel, The Hilton Milwaukee City Center, Hilton Madison at Monona Terrace, The Grand Geneva Resort & Spa, InterContinental Milwaukee, Skirvin Hilton, AC Hotel Chicago Downtown and The Lincoln Marriott Cornhusker Hotel.

About Extended Stay America

Extended Stay America, Inc. is a owner/operator of company-branded hotels in North America. The Company operates in the extended stay lodging industry. The Company owns and operates approximately 700 hotel properties consisting of approximately 75,900 rooms located in 44 states across the United States of America and in Canada. The Company owns and operates hotels under the core brand, Extended Stay America. In addition, the Company owns and operates three Extended Stay Canada hotels, 49 hotels in the economy extended stay segment under the Crossland Economy Studios and Hometown Inn brands, and also manage two Extended Stay America hotels.

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