MGM Growth Properties (NYSE: MGP) and Chatham Lodging Trust (REIT) (NYSE:CLDT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Profitability

This table compares MGM Growth Properties and Chatham Lodging Trust (REIT)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGM Growth Properties 6.21% 0.81% 0.48%
Chatham Lodging Trust (REIT) 8.73% 3.76% 1.97%

Valuation and Earnings

This table compares MGM Growth Properties and Chatham Lodging Trust (REIT)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MGM Growth Properties $725.00 million 2.47 $613.53 million $0.77 40.27
Chatham Lodging Trust (REIT) $290.53 million 2.84 $106.69 million $0.66 31.86

MGM Growth Properties has higher revenue and earnings than Chatham Lodging Trust (REIT). Chatham Lodging Trust (REIT) is trading at a lower price-to-earnings ratio than MGM Growth Properties, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.7% of MGM Growth Properties shares are held by institutional investors. Comparatively, 83.1% of Chatham Lodging Trust (REIT) shares are held by institutional investors. 0.6% of MGM Growth Properties shares are held by insiders. Comparatively, 3.6% of Chatham Lodging Trust (REIT) shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

MGM Growth Properties pays an annual dividend of $1.58 per share and has a dividend yield of 5.1%. Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 6.3%. MGM Growth Properties pays out 205.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust (REIT) pays out 200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGM Growth Properties has increased its dividend for 2 consecutive years. Chatham Lodging Trust (REIT) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and price targets for MGM Growth Properties and Chatham Lodging Trust (REIT), as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGM Growth Properties 0 1 4 0 2.80
Chatham Lodging Trust (REIT) 0 5 1 0 2.17

MGM Growth Properties currently has a consensus target price of $31.20, suggesting a potential upside of 0.61%. Chatham Lodging Trust (REIT) has a consensus target price of $20.30, suggesting a potential downside of 3.47%. Given MGM Growth Properties’ stronger consensus rating and higher probable upside, equities analysts clearly believe MGM Growth Properties is more favorable than Chatham Lodging Trust (REIT).

Risk and Volatility

MGM Growth Properties has a beta of -1.31, indicating that its stock price is 231% less volatile than the S&P 500. Comparatively, Chatham Lodging Trust (REIT) has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Summary

MGM Growth Properties beats Chatham Lodging Trust (REIT) on 9 of the 17 factors compared between the two stocks.

MGM Growth Properties Company Profile

MGM Growth Properties LLC is a real estate investment trust engaged in the acquisition, ownership and leasing of destination entertainment and leisure resorts, whose amenities include casino gaming, hotel, convention, dining, entertainment and retail offerings. Its portfolio consists of approximately 10 destination resorts. It has over six entertainment and gaming-related properties located on the Las Vegas Strip, including Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor and Excalibur, and The Park, a dining and entertainment complex located between New York-New York and Monte Carlo. Outside of Las Vegas, it owns over four casino resort properties, including MGM Grand Detroit in Detroit, Michigan, Borgata Hotel Casino & Spa in Atlantic City, New Jersey, and Beau Rivage and Gold Strike Tunica, both of which are located in Mississippi. It operates approximately 27,330 hotel rooms, over 200 restaurants, approximately 100 retail outlets and over 20 entertainment venues.

Chatham Lodging Trust (REIT) Company Profile

Chatham Lodging Trust is a real estate investment trust. The Company invests primarily in upscale extended-stay and premium-branded select-service hotels. All of the Company’s assets are held by, and all of its operations are conducted through Chatham Lodging, L.P. (the Operating Partnership). As of December 31, 2016, the Company owned 38 hotels with an aggregate of 5,712 rooms located in 15 states and the District of Columbia. As of December 31, 2016, the Company’s hotels included upscale extended-stay hotels that operate under the Residence Inn by Marriott brand (15 hotels) and Homewood Suites by Hilton brand (nine hotels), as well as premium-branded select-service hotels that operate under the Courtyard by Marriott brand (four hotels), the Hampton Inn or Hampton Inn and Suites by Hilton brand (three hotels), the Hilton Garden Inn by Hilton brand (three hotels), the SpringHill Suites by Marriott brand (two hotels) and the Hyatt Place brand (two hotels).

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