Extended Stay America (NYSE: STAY) and La Quinta Holdings (NYSE:LQ) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, institutional ownership, valuation, profitability, analyst recommendations, earnings and dividends.
Extended Stay America pays an annual dividend of $0.84 per share and has a dividend yield of 5.1%. La Quinta Holdings does not pay a dividend. Extended Stay America pays out 215.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. La Quinta Holdings has raised its dividend for 2 consecutive years.
Earnings and Valuation
This table compares Extended Stay America and La Quinta Holdings’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Extended Stay America||$1.27 billion||2.49||$69.93 million||$0.39||42.21|
|La Quinta Holdings||$1.01 billion||1.99||-$1.28 million||$0.26||65.73|
Extended Stay America has higher revenue and earnings than La Quinta Holdings. Extended Stay America is trading at a lower price-to-earnings ratio than La Quinta Holdings, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and recommmendations for Extended Stay America and La Quinta Holdings, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Extended Stay America||0||1||7||0||2.88|
|La Quinta Holdings||0||2||2||0||2.50|
Extended Stay America currently has a consensus target price of $20.53, indicating a potential upside of 24.73%. La Quinta Holdings has a consensus target price of $17.08, indicating a potential downside of 0.04%. Given Extended Stay America’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Extended Stay America is more favorable than La Quinta Holdings.
Insider & Institutional Ownership
99.5% of Extended Stay America shares are held by institutional investors. Comparatively, 98.7% of La Quinta Holdings shares are held by institutional investors. 0.6% of Extended Stay America shares are held by insiders. Comparatively, 1.3% of La Quinta Holdings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Volatility & Risk
Extended Stay America has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, La Quinta Holdings has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500.
This table compares Extended Stay America and La Quinta Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Extended Stay America||5.83%||14.53%||4.74%|
|La Quinta Holdings||3.11%||6.23%||1.45%|
Extended Stay America beats La Quinta Holdings on 12 of the 17 factors compared between the two stocks.
About Extended Stay America
Extended Stay America, Inc. is a owner/operator of company-branded hotels in North America. The Company operates in the extended stay lodging industry. The Company owns and operates approximately 700 hotel properties consisting of approximately 75,900 rooms located in 44 states across the United States of America and in Canada. The Company owns and operates hotels under the core brand, Extended Stay America. In addition, the Company owns and operates three Extended Stay Canada hotels, 49 hotels in the economy extended stay segment under the Crossland Economy Studios and Hometown Inn brands, and also manage two Extended Stay America hotels.
About La Quinta Holdings
La Quinta Holdings Inc. is an owner, operator and franchisor of select-service hotels primarily serving the midscale and upper-midscale sectors under the La Quinta brand. The Company’s segments include owned hotels, franchise and management, and corporate and other. The owned hotels segment is engaged in the operation of owned hotel properties. The franchise and management segment is engaged in various license, franchise and management agreements relating to its owned and franchised hotels. As of December 31, 2016, its portfolio consisted of 888 hotels representing approximately 87,200 rooms located primarily across 48 states in the United States, as well as in Canada, Mexico, Honduras and Colombia, of which 322 hotels were owned and operated, and 566 were franchised. As of December 31, 2016, the Company had a pipeline of 248 franchised hotels in the United States, Mexico, Colombia, Nicaragua, Guatemala, Chile and El Salvador.
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