Critical Analysis: Host Hotels & Resorts (HST) versus Gaming and Leisure Properties (GLPI)

Host Hotels & Resorts (NYSE: HST) and Gaming and Leisure Properties (NASDAQ:GLPI) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.

Insider & Institutional Ownership

89.4% of Gaming and Leisure Properties shares are owned by institutional investors. 1.7% of Host Hotels & Resorts shares are owned by insiders. Comparatively, 5.9% of Gaming and Leisure Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Host Hotels & Resorts and Gaming and Leisure Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Host Hotels & Resorts 11.09% 8.47% 5.16%
Gaming and Leisure Properties 38.99% 17.14% 5.71%

Dividends

Host Hotels & Resorts pays an annual dividend of $0.80 per share and has a dividend yield of 4.4%. Gaming and Leisure Properties pays an annual dividend of $2.52 per share and has a dividend yield of 6.7%. Host Hotels & Resorts pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gaming and Leisure Properties pays out 141.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gaming and Leisure Properties has increased its dividend for 6 consecutive years. Gaming and Leisure Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Host Hotels & Resorts has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Gaming and Leisure Properties has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Host Hotels & Resorts and Gaming and Leisure Properties, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Host Hotels & Resorts 1 8 5 0 2.29
Gaming and Leisure Properties 1 3 3 0 2.29

Host Hotels & Resorts presently has a consensus price target of $18.11, indicating a potential downside of 0.83%. Gaming and Leisure Properties has a consensus price target of $38.80, indicating a potential upside of 3.19%. Given Gaming and Leisure Properties’ higher possible upside, analysts clearly believe Gaming and Leisure Properties is more favorable than Host Hotels & Resorts.

Earnings and Valuation

This table compares Host Hotels & Resorts and Gaming and Leisure Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Host Hotels & Resorts $5.45 billion 2.48 $1.45 billion $0.80 22.83
Gaming and Leisure Properties N/A N/A N/A $1.78 21.12

Host Hotels & Resorts has higher revenue and earnings than Gaming and Leisure Properties. Gaming and Leisure Properties is trading at a lower price-to-earnings ratio than Host Hotels & Resorts, indicating that it is currently the more affordable of the two stocks.

Summary

Gaming and Leisure Properties beats Host Hotels & Resorts on 10 of the 14 factors compared between the two stocks.

About Host Hotels & Resorts

Host Hotels & Resorts, Inc. (Host Inc.) operates as a self-managed and self-administered real estate investment trust (REIT). The Company operates through hotel ownership segment. The Company operates through hotel ownership segment. The Company owned properties and conducted operations through Host Hotels & Resorts, L.P. (Host L.P.), of which Host Inc. was the general partner and of which it held approximately 99% of the partnership interests (OP units), as of December 31, 2016. As of February 20, 2017, its lodging portfolio consisted of 96 primarily luxury and upper-upscale hotels containing approximately 53,500 rooms, with the majority located in the United States, and with seven of the properties located outside of the United States in Australia, Brazil, Canada and Mexico. In addition, it owns non-controlling interests in two international joint ventures: approximately a 33% interest in a joint venture in Europe, and a 9% indirect interest, through joint ventures in India.

About Gaming and Leisure Properties

Gaming and Leisure Properties, Inc. (GLPI) is a self-administered and self-managed Pennsylvania real estate investment trust (REIT). The Company is engaged in the business of acquiring, financing and owning real estate property to be leased to gaming operators in triple net lease arrangements. Its segments include GLP Capital, L.P. (GLP Capital), through which the Company owns all of its real estate assets, and the TRS Properties, which consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. The GLP Capital segment consists of the leased real property. As of December 31, 2016, the Company had 34 rental properties, consisting of the real property associated with 18 gaming and related facilities operated by Penn National Gaming, Inc. (Penn), the real property associated with 15 gaming and related facilities operated by Pinnacle Entertainment, Inc. (Pinnacle), and the real property associated with the Casino Queen in East St. Louis, Illinois.

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