China Lodging Group, Limited (HTHT) and Hilton Worldwide Holdings (HLT) Critical Review
China Lodging Group, Limited (NASDAQ: HTHT) and Hilton Worldwide Holdings (NYSE:HLT) are both mid-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitabiliy and risk.
Volatility and Risk
China Lodging Group, Limited has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500. Comparatively, Hilton Worldwide Holdings has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.
Hilton Worldwide Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.0%. China Lodging Group, Limited does not pay a dividend. Hilton Worldwide Holdings pays out 176.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Valuation and Earnings
This table compares China Lodging Group, Limited and Hilton Worldwide Holdings’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|China Lodging Group, Limited||$986.26 million||6.23||$262.82 million||$1.84||47.96|
|Hilton Worldwide Holdings||$7.30 billion||2.81||$2.64 billion||$0.34||184.11|
Hilton Worldwide Holdings has higher revenue and earnings than China Lodging Group, Limited. China Lodging Group, Limited is trading at a lower price-to-earnings ratio than Hilton Worldwide Holdings, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations for China Lodging Group, Limited and Hilton Worldwide Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|China Lodging Group, Limited||0||2||5||0||2.71|
|Hilton Worldwide Holdings||2||4||12||0||2.56|
China Lodging Group, Limited presently has a consensus price target of $64.67, suggesting a potential downside of 26.72%. Hilton Worldwide Holdings has a consensus price target of $72.71, suggesting a potential upside of 16.12%. Given Hilton Worldwide Holdings’ higher probable upside, analysts clearly believe Hilton Worldwide Holdings is more favorable than China Lodging Group, Limited.
Insider and Institutional Ownership
44.7% of China Lodging Group, Limited shares are owned by institutional investors. Comparatively, 100.0% of Hilton Worldwide Holdings shares are owned by institutional investors. 1.5% of Hilton Worldwide Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares China Lodging Group, Limited and Hilton Worldwide Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|China Lodging Group, Limited||13.29%||16.80%||9.09%|
|Hilton Worldwide Holdings||1.02%||16.50%||3.63%|
China Lodging Group, Limited Company Profile
China Lodging Group, Limited is a holding company. The Company is a multi-brand hotel group in China with leased, manachised and franchised models. Under the lease model, the Company directly operates hotels located on leased properties. Under the manachise model, the Company manages manachised hotels through the on-site hotel managers the Company appoints and collects fees from franchisees. Under the franchise model, the Company provides training, reservation and support services to the franchised hotels and collects fees from franchisees. The Company has approximately 620 leased hotels; over 2,070 manachised hotels and approximately 80 franchised hotels in operation and over 20 leased hotels and approximately 660 manachised and franchised hotels under development. The Company offers approximately seven hotel brands that focus on various segments of customers: Joya Hotel, Manxin Hotels & Resorts, JI Hotel, Starway Hotel, Elan Hotel, HanTing Hotel and Hi Inn.
Hilton Worldwide Holdings Company Profile
Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company’s segments include ownership, and management and franchise. Its global portfolio of owned and leased properties includes a range of hotels in gateway cities, such as New York City, London, San Francisco, Chicago, Sao Paolo and Tokyo. The Company’s management and franchise segment manages hotels and licenses its brands to franchisees. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories.
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