Financial Analysis: Red Lion Hotels (RLH) and 7 DAYS GROUP (SVN)

Red Lion Hotels (NYSE: RLH) and 7 DAYS GROUP (NYSE:SVN) are both cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Profitability

This table compares Red Lion Hotels and 7 DAYS GROUP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Lion Hotels -1.81% -2.53% -1.37%
7 DAYS GROUP N/A N/A N/A

Insider & Institutional Ownership

66.8% of Red Lion Hotels shares are owned by institutional investors. 14.7% of Red Lion Hotels shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Red Lion Hotels and 7 DAYS GROUP’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Red Lion Hotels $164.07 million 1.43 -$4.67 million ($0.18) -55.00
7 DAYS GROUP N/A N/A N/A $0.53 N/A

7 DAYS GROUP has lower revenue, but higher earnings than Red Lion Hotels. Red Lion Hotels is trading at a lower price-to-earnings ratio than 7 DAYS GROUP, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Red Lion Hotels and 7 DAYS GROUP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Lion Hotels 0 0 1 0 3.00
7 DAYS GROUP 0 0 0 0 N/A

Red Lion Hotels presently has a consensus target price of $13.75, indicating a potential upside of 38.89%.

About Red Lion Hotels

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 and other. The company operated hotel 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. The franchised hotels segment offers various programs, which include its reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards.

About 7 DAYS GROUP

7 Days Group Holdings Limited (7 Days Inn) is an offshore holding company structure and conducts its operations in the People’s Republic of China through its wholly owned subsidiary, 7 Days Inn (Shenzhen) Co., Ltd. (7 Days Shenzhen), and its subsidiaries and branches. The Company converts and operates limited service economy hotels across metropolitan areas in the People’s Republic of China. It offers accommodations and services. As of December 31, 2010, it had 568 hotels in operation, 247 of which were managed hotels, with 56,410 hotel rooms in 89 cities, and an additional 197 hotels with 19,345 hotel rooms under conversion. As of December 31, 2010, approximately 16.5 million members were registered with its 7 Days Club. In December 2011, the Company acquired Hunan Huatian Star Hotel Management Limited.

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