Wyndham Worldwide Corp (NYSE: WYN) and Starwood Hotels & Resorts Worldwide (NYSE:HOT) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitabiliy and analyst recommendations.

Profitability

This table compares Wyndham Worldwide Corp and Starwood Hotels & Resorts Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wyndham Worldwide Corp 10.17% 91.17% 6.28%
Starwood Hotels & Resorts Worldwide -2.81% -18.50% -1.83%

Analyst Recommendations

This is a breakdown of current recommendations for Wyndham Worldwide Corp and Starwood Hotels & Resorts Worldwide, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wyndham Worldwide Corp 1 4 4 0 2.33
Starwood Hotels & Resorts Worldwide 0 0 0 0 N/A

Wyndham Worldwide Corp currently has a consensus price target of $96.88, suggesting a potential downside of 5.27%. Given Wyndham Worldwide Corp’s higher probable upside, analysts plainly believe Wyndham Worldwide Corp is more favorable than Starwood Hotels & Resorts Worldwide.

Institutional and Insider Ownership

93.4% of Wyndham Worldwide Corp shares are held by institutional investors. Comparatively, 83.5% of Starwood Hotels & Resorts Worldwide shares are held by institutional investors. 2.4% of Wyndham Worldwide Corp shares are held by insiders. Comparatively, 0.7% of Starwood Hotels & Resorts Worldwide shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Wyndham Worldwide Corp and Starwood Hotels & Resorts Worldwide’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Wyndham Worldwide Corp $5.24 billion 2.03 $1.34 billion $5.39 18.97
Starwood Hotels & Resorts Worldwide N/A N/A N/A $0.48 160.52

Wyndham Worldwide Corp has higher revenue and earnings than Starwood Hotels & Resorts Worldwide. Wyndham Worldwide Corp is trading at a lower price-to-earnings ratio than Starwood Hotels & Resorts Worldwide, indicating that it is currently the more affordable of the two stocks.

Dividends

Wyndham Worldwide Corp pays an annual dividend of $2.32 per share and has a dividend yield of 2.3%. Starwood Hotels & Resorts Worldwide pays an annual dividend of $1.50 per share and has a dividend yield of 1.9%. Wyndham Worldwide Corp pays out 43.0% of its earnings in the form of a dividend. Starwood Hotels & Resorts Worldwide pays out 312.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Wyndham Worldwide Corp has increased its dividend for 7 consecutive years and Starwood Hotels & Resorts Worldwide has increased its dividend for 7 consecutive years. Wyndham Worldwide Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Wyndham Worldwide Corp has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Starwood Hotels & Resorts Worldwide has a beta of 1.99, indicating that its share price is 99% more volatile than the S&P 500.

Summary

Wyndham Worldwide Corp beats Starwood Hotels & Resorts Worldwide on 11 of the 12 factors compared between the two stocks.

Wyndham Worldwide Corp Company Profile

Wyndham Worldwide Corporation is a hospitality company. The Company offers a range of hospitality services and products through its global portfolio of brands. The Company operates through three segments: Wyndham Hotel Group, Wyndham Destination Network and Wyndham Vacation Ownership. The Company’s brands include Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites by Wyndham, TRYP by Wyndham, Dolce Hotels and Resorts, RCI, Landal GreenParks, Novasol, Hoseasons, cottages.com, James Villa Holidays, Wyndham Vacation Rentals, Wyndham Vacation Resorts, Shell Vacations Club and WorldMark by Wyndham. As of December 31, 2016, its Wyndham Hotel Group had 8,035 hotels and over 697,600 hotel rooms around the world. Its Wyndham Destination Network segment offers non-hotel accommodations. The Wyndham Vacation Ownership segment develops and acquires vacation ownership resorts.

Starwood Hotels & Resorts Worldwide Company Profile

Starwood Hotels & Resorts Worldwide, LLC, formerly Starwood Hotels & Resorts Worldwide, Inc., is a hotel and leisure company. The Company’s hotel business is focused on the global operation of hotels and resorts primarily in the luxury and upper upscale segments of the lodging industry. The Company manages and operates its hotel business in three hotel segments: the Americas; Europe, Africa and the Middle East (EAME), and Asia Pacific. Its vacation ownership and residential business is a separate segment. The Company conducts its hotel and leisure business both directly and through its subsidiaries. It owns Starwood Vacation Ownership, Inc., a provider of vacation experiences through villa-style resorts and access to Starwood brands. The Starwood Preferred Guest program is its traveler, customer loyalty and multi-brand marketing program. The Company also develops, owns and operates vacation ownership resorts, and markets and sells the vacation ownership Interests in the resorts.

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