Head-To-Head Analysis: Hilton Worldwide (NYSE:HLT) & Cheesecake Factory (NASDAQ:CAKE)

Cheesecake Factory (NASDAQ:CAKE) and Hilton Worldwide (NYSE:HLT) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Profitability

This table compares Cheesecake Factory and Hilton Worldwide’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cheesecake Factory	5.20%	46.95%	6.74%
Hilton Worldwide	13.40%	-33.78%	12.16%

Dividends

Cheesecake Factory pays an annual dividend of $1.20 per share and has a dividend yield of 1.1%. Hilton Worldwide pays an annual dividend of $0.60 per share and has a dividend yield of 0.2%. Cheesecake Factory pays out 28.4% of its earnings in the form of a dividend. Hilton Worldwide pays out 8.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a summary of current recommendations for Cheesecake Factory and Hilton Worldwide, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cheesecake Factory	2	12	5	1	2.25
Hilton Worldwide	0	8	16	2	2.77

Cheesecake Factory currently has a consensus target price of $95.47, suggesting a potential downside of 15.25%. Hilton Worldwide has a consensus target price of $363.57, suggesting a potential upside of 1.86%. Given Hilton Worldwide’s stronger consensus rating and higher possible upside, analysts plainly believe Hilton Worldwide is more favorable than Cheesecake Factory.

Institutional & Insider Ownership

94.5% of Cheesecake Factory shares are owned by institutional investors. Comparatively, 95.9% of Hilton Worldwide shares are owned by institutional investors. 8.0% of Cheesecake Factory shares are owned by insiders. Comparatively, 2.7% of Hilton Worldwide shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Cheesecake Factory has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, Hilton Worldwide has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Valuation and Earnings

This table compares Cheesecake Factory and Hilton Worldwide”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cheesecake Factory	$3.75 billion	1.49	$148.43 million	$4.22	26.69
Hilton Worldwide	$12.04 billion	6.60	$1.46 billion	$7.40	48.23

Hilton Worldwide has higher revenue and earnings than Cheesecake Factory. Cheesecake Factory is trading at a lower price-to-earnings ratio than Hilton Worldwide, indicating that it is currently the more affordable of the two stocks.

Summary

Hilton Worldwide beats Cheesecake Factory on 14 of the 17 factors compared between the two stocks.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.

About Hilton Worldwide

Hilton Worldwide Holdings Inc., a hospitality company, engages in managing, franchising, owning, and leasing 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. It operates luxury hotels under the Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, and Conrad Hotels & Resorts brand; lifestyle hotels under the Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton, and Motto by Hilton brand; full service hotels under the Signia by Hilton, Hilton Hotels & Resorts, and DoubleTree by Hilton brand; service hotels under the Hilton Garden Inn, Hampton by Hilton, and Tru by Hilton brand; all-suite hotels under the Embassy Suites by Hilton, Homewood Suites by Hilton, and Home2 Suites by Hilton brand; and economy hotel under the Spark by Hilton brand, as well as Hilton Grand Vacations. The company operates in North America, South America, and Central America, including various Caribbean nations; Europe, the Middle East, and Africa; and the Asia Pacific. The company was founded in 1919 and is headquartered in McLean, Virginia.