Morgans Hotel Group (NASDAQ: MHGC) and Red Lion Hotels Corporation (NYSE:RLH) are both cyclical consumer goods & services companies, but which is the superior business? We will compare the two companies based on the strength of their profitabiliy, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares Morgans Hotel Group and Red Lion Hotels Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Morgans Hotel Group N/A N/A N/A $0.23 9.35
Red Lion Hotels Corporation $165.67 million 0.99 $20.55 million ($0.17) -40.88

Red Lion Hotels Corporation has higher revenue and earnings than Morgans Hotel Group. Red Lion Hotels Corporation is trading at a lower price-to-earnings ratio than Morgans Hotel Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

33.2% of Morgans Hotel Group shares are held by institutional investors. Comparatively, 63.5% of Red Lion Hotels Corporation shares are held by institutional investors. 1.8% of Morgans Hotel Group shares are held by company insiders. Comparatively, 14.7% of Red Lion Hotels Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Morgans Hotel Group and Red Lion Hotels Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Morgans Hotel Group -17.23% N/A -6.56%
Red Lion Hotels Corporation -2.03% -1.91% -1.03%

Analyst Recommendations

This is a summary of recent recommendations for Morgans Hotel Group and Red Lion Hotels Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Morgans Hotel Group 0 0 0 0 N/A
Red Lion Hotels Corporation 0 0 1 0 3.00

Red Lion Hotels Corporation has a consensus target price of $12.50, suggesting a potential upside of 79.86%. Given Red Lion Hotels Corporation’s higher probable upside, analysts plainly believe Red Lion Hotels Corporation is more favorable than Morgans Hotel Group.

Risk and Volatility

Morgans Hotel Group has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, Red Lion Hotels Corporation has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Summary

Red Lion Hotels Corporation beats Morgans Hotel Group on 7 of the 10 factors compared between the two stocks.

About Morgans Hotel Group

Morgans Hotel Group Co. is a lifestyle hospitality company. The Company operates, owns, licenses and develops boutique hotels, primarily in gateway cities and select resort markets in the United States, Europe and other international locations. Its portfolio of Morgans Hotel Group branded hotel properties and food and beverage operations and entities consists of its over three owned hotels, including Hudson in New York, Delano South Beach in Miami Beach and Clift in San Francisco; its owned food and beverage operations consisting of leasehold interests in the food and beverage operations located at Sanderson, in London; its unconsolidated Joint Venture Hotel, including Mondrian South Beach in Miami Beach; its over seven Managed Hotels consisting of Royalton and Morgans in New York, Shore Club in Miami Beach, Mondrian in Los Angeles, and Sanderson, St Martins Lane and Mondrian London in London, and its licensed hotel, Delano Las Vegas, and its franchised hotel, 10 Karakoy, in Istanbul.

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.

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