Reviewing Hilton Grand Vacations (NYSE:HGV) and Arcos Dorados (NYSE:ARCO)

Hilton Grand Vacations (NYSE:HGV) and Arcos Dorados (NYSE:ARCO) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Profitability

This table compares Hilton Grand Vacations and Arcos Dorados’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilton Grand Vacations	2.86%	20.40%	2.41%
Arcos Dorados	5.15%	12.50%	2.58%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Hilton Grand Vacations and Arcos Dorados, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilton Grand Vacations	0	8	4	0	2.33
Arcos Dorados	0	2	3	0	2.60

Hilton Grand Vacations presently has a consensus target price of $54.67, suggesting a potential upside of 53.56%. Arcos Dorados has a consensus target price of $10.50, suggesting a potential upside of 39.35%. Given Hilton Grand Vacations’ higher probable upside, analysts clearly believe Hilton Grand Vacations is more favorable than Arcos Dorados.

Risk and Volatility

Hilton Grand Vacations has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.

Institutional & Insider Ownership

97.2% of Hilton Grand Vacations shares are held by institutional investors. Comparatively, 55.9% of Arcos Dorados shares are held by institutional investors. 3.1% of Hilton Grand Vacations shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Hilton Grand Vacations and Arcos Dorados”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilton Grand Vacations	$5.05 billion	0.55	$81.00 million	$1.77	20.11
Arcos Dorados	$4.68 billion	0.34	$212.12 million	$1.22	6.18

Arcos Dorados has lower revenue, but higher earnings than Hilton Grand Vacations. Arcos Dorados is trading at a lower price-to-earnings ratio than Hilton Grand Vacations, indicating that it is currently the more affordable of the two stocks.

Summary

Hilton Grand Vacations beats Arcos Dorados on 10 of the 14 factors compared between the two stocks.

About Hilton Grand Vacations

Hilton Grand Vacations Inc., a timeshare company, develops, markets, sells, manages, and operates the resorts, plans and ancillary reservation services under the Hilton Grand Vacations brand. It operates through Real Estate Sales and Financing, and Resort Operations and Club Management segments. Real Estate Sales and Financing segment market and sells the VOIs, and source VOIs through fee-for-service agreements with third-party developers; and provides consumer financing and services loans. Resort Operations and Club Management segment manages and operates the clubs which offers exchange, leisure travel, and reservation services, as well as engages in the rental of inventory made available due to ownership exchanges through its club programs, and provides ancillary services including food and beverage, retail and spa at timeshare properties. Hilton Grand Vacations Inc. was founded in 1992 and is headquartered in Orlando, Florida.

About Arcos Dorados

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald’s restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald’s restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela. The company was founded in 2007 and is based in Montevideo, Uruguay.