Extended Stay America (NASDAQ:STAY) and Wyndham Hotels & Resorts (NYSE:WH) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.
Risk & Volatility
Extended Stay America has a beta of 1.9, meaning that its share price is 90% more volatile than the S&P 500. Comparatively, Wyndham Hotels & Resorts has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500.
Dividends
Extended Stay America pays an annual dividend of $0.36 per share and has a dividend yield of 1.8%. Wyndham Hotels & Resorts pays an annual dividend of $0.64 per share and has a dividend yield of 0.9%. Extended Stay America pays out 37.9% of its earnings in the form of a dividend. Wyndham Hotels & Resorts pays out 19.5% 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. Extended Stay America has raised its dividend for 1 consecutive years and Wyndham Hotels & Resorts has raised its dividend for 1 consecutive years.
Profitability
This table compares Extended Stay America and Wyndham Hotels & Resorts' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Extended Stay America | -2.88% | 5.61% | 1.51% |
| Wyndham Hotels & Resorts | -2.50% | 21.25% | 4.99% |
Valuation and Earnings
This table compares Extended Stay America and Wyndham Hotels & Resorts' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Extended Stay America | $1.22 billion | 2.98 | $69.67 million | $0.95 | 20.88 |
| Wyndham Hotels & Resorts | $2.05 billion | 3.28 | $157 million | $3.28 | 22.01 |
Wyndham Hotels & Resorts has higher revenue and earnings than Extended Stay America. Extended Stay America is trading at a lower price-to-earnings ratio than Wyndham Hotels & Resorts, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
76.8% of Extended Stay America shares are owned by institutional investors. Comparatively, 93.0% of Wyndham Hotels & Resorts shares are owned by institutional investors. 0.7% of Extended Stay America shares are owned by insiders. Comparatively, 1.8% of Wyndham Hotels & Resorts shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Analyst Recommendations
This is a summary of recent ratings and target prices for Extended Stay America and Wyndham Hotels & Resorts, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Extended Stay America | 0 | 3 | 1 | 0 | 2.25 |
| Wyndham Hotels & Resorts | 0 | 0 | 12 | 0 | 3.00 |
Extended Stay America presently has a consensus target price of $17.90, suggesting a potential downside of 9.78%. Wyndham Hotels & Resorts has a consensus target price of $59.0833, suggesting a potential downside of 18.14%. Given Extended Stay America's higher possible upside, equities analysts clearly believe Extended Stay America is more favorable than Wyndham Hotels & Resorts.
Summary
Wyndham Hotels & Resorts beats Extended Stay America on 12 of the 16 factors compared between the two stocks.
