Red Lion Hotels Corporation (NYSE: RLH) and La Quinta Holdings (NYSE:LQ) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitabiliy, institutional ownership, risk and analyst recommendations.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Red Lion Hotels Corporation and La Quinta Holdings, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Red Lion Hotels Corporation | 0 | 0 | 1 | 0 | 3.00 |
| La Quinta Holdings | 1 | 5 | 3 | 0 | 2.22 |
Red Lion Hotels Corporation currently has a consensus price target of $12.50, indicating a potential upside of 71.23%. La Quinta Holdings has a consensus price target of $13.21, indicating a potential downside of 8.16%. Given Red Lion Hotels Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Red Lion Hotels Corporation is more favorable than La Quinta Holdings.
Profitability
This table compares Red Lion Hotels Corporation and La Quinta Holdings’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Red Lion Hotels Corporation | -2.03% | -1.91% | -1.03% |
| La Quinta Holdings | 3.91% | 8.04% | 1.81% |
Earnings & Valuation
This table compares Red Lion Hotels Corporation and La Quinta Holdings’ top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Red Lion Hotels Corporation | $165.67 million | 1.04 | $20.55 million | ($0.17) | -42.94 |
| La Quinta Holdings | $973.13 million | 1.74 | $308.98 million | $0.34 | 42.29 |
La Quinta Holdings has higher revenue and earnings than Red Lion Hotels Corporation. Red Lion Hotels Corporation 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.
Insider & Institutional Ownership
63.2% of Red Lion Hotels Corporation shares are held by institutional investors. Comparatively, 99.2% of La Quinta Holdings shares are held by institutional investors. 14.7% of Red Lion Hotels Corporation shares are held by company insiders. Comparatively, 1.6% of La Quinta Holdings shares are held by company 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
Red Lion Hotels Corporation has a beta of 0.59, suggesting that its stock price is 41% less 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.
Summary
La Quinta Holdings beats Red Lion Hotels Corporation on 10 of the 13 factors compared between the two stocks.
About Red Lion Hotels Corporation
Red Lion Hotels Corporation (RLHC) is a hospitality and leisure company. The Company is engaged in the franchising, management and ownership of hotels under the brands, including Hotel RL, Red Lion Hotel, Red Lion Inn & Suites, GuestHouse and Settle Inn & Suites (collectively the RLHC Brands). The RLHC brands represent upscale, midscale and economy hotels. The Company’s segments include company operated hotel segment, franchised hotels segment, entertainment segment and other. The hotels segment is engaged in guest room rentals, and food and beverage operations at its operated hotels. The franchised hotels segment is engaged in licensing its brands to franchisees. It offers various programs, which include its reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards. The entertainment segment consists of its WestCoast Entertainment and TicketsWest operations.
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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