Head to Head Review: Extended Stay America (STAY) and Belmond (BEL)

Extended Stay America (NYSE: STAY) and Belmond (NYSE:BEL) 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, earnings, dividends, profitabiliy, institutional ownership, risk and valuation.

Risk & Volatility

Extended Stay America has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Belmond has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Earnings & Valuation

This table compares Extended Stay America and Belmond’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Extended Stay America $1.27 billion 2.90 $597.63 million $0.37 51.22
Belmond $547.78 million 2.46 $102.94 million $0.20 66.00

Extended Stay America has higher revenue and earnings than Belmond. Extended Stay America is trading at a lower price-to-earnings ratio than Belmond, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Extended Stay America and Belmond’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Extended Stay America 5.96% 14.43% 4.75%
Belmond 3.61% 1.74% 0.77%

Insider and Institutional Ownership

92.1% of Extended Stay America shares are owned by institutional investors. Comparatively, 75.5% of Belmond shares are owned by institutional investors. 0.5% of Extended Stay America shares are owned by insiders. Comparatively, 87.6% of Belmond shares are owned by 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.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Extended Stay America and Belmond, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Extended Stay America 0 2 5 0 2.71
Belmond 0 3 2 0 2.40

Extended Stay America presently has a consensus target price of $18.50, indicating a potential downside of 2.37%. Belmond has a consensus target price of $14.50, indicating a potential upside of 9.85%. Given Belmond’s higher possible upside, analysts clearly believe Belmond is more favorable than Extended Stay America.

Dividends

Extended Stay America pays an annual dividend of $0.84 per share and has a dividend yield of 4.4%. Belmond does not pay a dividend. Extended Stay America pays out 227.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Extended Stay America has increased its dividend for 2 consecutive years.

Summary

Extended Stay America beats Belmond on 13 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 Belmond

Belmond Ltd. (Belmond) is a hotel company and adventure travel operator. As of December 31, 2016, Belmond owned, partially-owned and/or operated 45 properties, consisting of 34 individual deluxe hotels, 29 of which are owned (including nine under long-term lease), five European tourist trains, two cruise ships in Myanmar (one of which is under long-term charter), one French canal cruise business consisting of five small canal boats, and one stand-alone restaurant in the United States. It operates through six segments: owned hotels in Europe, owned hotels in North America (including one stand-alone restaurant), owned hotels in Rest of world, owned trains and cruises, part-owned/managed hotels and part-owned/managed trains. As of December 31, 2016, Belmond’s around the world portfolio of hotels in operation consisted of 3,272 individual guest rooms and multiple-room suites (keys).

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