Marcus Corporation (The) (NYSE: MCS) 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 earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Profitability

This table compares Marcus Corporation (The) and Choice Hotels International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marcus Corporation (The) 7.18% 10.78% 4.71%
Choice Hotels International 16.11% -51.30% 17.25%

Dividends

Marcus Corporation (The) pays an annual dividend of $0.50 per share and has a dividend yield of 1.8%. Choice Hotels International pays an annual dividend of $0.86 per share and has a dividend yield of 1.4%. Marcus Corporation (The) pays out 33.1% of its earnings in the form of a dividend. Choice Hotels International pays out 31.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Marcus Corporation (The) has increased its dividend for 3 consecutive years and Choice Hotels International has increased its dividend for 5 consecutive years.

Insider and Institutional Ownership

59.5% of Marcus Corporation (The) shares are owned by institutional investors. Comparatively, 50.3% of Choice Hotels International shares are owned by institutional investors. 33.5% of Marcus Corporation (The) shares are owned by company insiders. Comparatively, 22.0% of Choice Hotels International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Marcus Corporation (The) and Choice Hotels International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Marcus Corporation (The) $594.17 million 1.28 $125.32 million $1.51 18.11
Choice Hotels International $950.47 million 3.73 $286.69 million $2.70 23.43

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

Volatility and Risk

Marcus Corporation (The) has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Choice Hotels International has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Marcus Corporation (The) and Choice Hotels International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marcus Corporation (The) 0 0 4 0 3.00
Choice Hotels International 1 4 1 0 2.00

Marcus Corporation (The) presently has a consensus target price of $37.60, suggesting a potential upside of 37.48%. Choice Hotels International has a consensus target price of $61.40, suggesting a potential downside of 2.92%. Given Marcus Corporation (The)’s stronger consensus rating and higher probable upside, research analysts plainly believe Marcus Corporation (The) is more favorable than Choice Hotels International.

Summary

Choice Hotels International beats Marcus Corporation (The) on 10 of the 17 factors compared between the two stocks.

Marcus Corporation (The) Company Profile

The Marcus Corporation operates principally in two business segments: Theatres, and Hotels and Resorts. The Theatres segment operates multiscreen motion picture theatres in Wisconsin, Illinois, Ohio, Minnesota, Iowa, North Dakota and Nebraska, and a family entertainment center in Wisconsin. The Hotels and Resorts segment owns and operates hotels and resorts in Wisconsin, Illinois, Oklahoma and Nebraska, and manages hotels, resorts and other properties in Wisconsin, Minnesota, Texas, Nevada, Georgia, Florida and California. As of December 31, 2015, the Company owned or operated 53 movie theatre locations with a total of 668 screens in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. Its owned and operated hotels and resorts include The Pfister Hotel, The Hilton Milwaukee City Center, Hilton Madison at Monona Terrace, The Grand Geneva Resort & Spa, InterContinental Milwaukee, Skirvin Hilton, AC Hotel Chicago Downtown and The Lincoln Marriott Cornhusker Hotel.

Choice Hotels International Company Profile

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.

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