Critical Comparison: Belmond (BEL) vs. Choice Hotels International (NYSE:CHH)

Belmond (NYSE: BEL) and Choice Hotels International (NYSE:CHH) are both consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitabiliy, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Dividends

Choice Hotels International pays an annual dividend of $0.86 per share and has a dividend yield of 1.3%. Belmond does not pay a dividend. Choice Hotels International pays out 33.2% of its earnings in the form of a dividend. Belmond has raised its dividend for 3 consecutive years.

Profitability

This table compares Belmond and Choice Hotels International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Belmond	3.61%	1.74%	0.77%
Choice Hotels International	16.05%	-45.12%	17.22%

Analyst Ratings

This is a breakdown of recent ratings for Belmond and Choice Hotels International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Belmond	0	3	2	0	2.40
Choice Hotels International	1	3	1	0	2.00

Belmond currently has a consensus price target of $14.50, suggesting a potential upside of 11.11%. Choice Hotels International has a consensus price target of $58.75, suggesting a potential downside of 9.89%. Given Belmond’s stronger consensus rating and higher possible upside, research analysts plainly believe Belmond is more favorable than Choice Hotels International.

Volatility & Risk

Belmond has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Choice Hotels International has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.

Institutional and Insider Ownership

75.4% of Belmond shares are held by institutional investors. Comparatively, 49.6% of Choice Hotels International shares are held by institutional investors. 87.6% of Belmond shares are held by company insiders. Comparatively, 22.0% of Choice Hotels International 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.

Earnings and Valuation

This table compares Belmond and Choice Hotels International’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Belmond	$547.78 million	2.43	$102.94 million	$0.20	65.25
Choice Hotels International	$915.42 million	3.99	$272.73 million	$2.59	25.17

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

Summary

Belmond beats Choice Hotels International on 9 of the 17 factors compared between the two stocks.

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).

About Choice Hotels International

Choice Hotels International, Inc. is a hotel franchisor. The Company’s segments include Hotel Franchising, SkyTouch Technology and Corporate & Other. It franchises lodging properties under brand names, including Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, Cambria hotels & suites, and Ascend Hotel Collection. The Company had 6,514 hotels open and 775 hotels under construction, awaiting conversion or approved for development, as of December 31, 2016, representing 516,122 rooms open and 62,547 rooms under construction, awaiting conversion or approved for development in 50 states, the District of Columbia and over 40 countries and territories outside the United States. Its domestic franchising operations are conducted through direct franchising relationships, while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.