Critical Review: Hilton Grand Vacations (HGV) versus Marriott International (MAR)

Hilton Grand Vacations (NYSE: HGV) and Marriott International (NASDAQ:MAR) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Profitability

This table compares Hilton Grand Vacations and Marriott International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hilton Grand Vacations N/A 88.54% 6.44%
Marriott International 5.27% 26.26% 5.76%

Dividends

Marriott International pays an annual dividend of $1.32 per share and has a dividend yield of 1.3%. Hilton Grand Vacations does not pay a dividend. Marriott International pays out 45.5% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Hilton Grand Vacations and Marriott International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hilton Grand Vacations $1.53 billion 2.36 $383.00 million N/A N/A
Marriott International $4.57 billion 8.59 $2.54 billion $2.90 36.34

Marriott International has higher revenue and earnings than Hilton Grand Vacations.

Insider and Institutional Ownership

97.9% of Hilton Grand Vacations shares are held by institutional investors. Comparatively, 65.9% of Marriott International shares are held by institutional investors. 0.5% of Hilton Grand Vacations shares are held by insiders. Comparatively, 11.3% of Marriott International shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Hilton Grand Vacations and Marriott International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hilton Grand Vacations 0 0 8 0 3.00
Marriott International 1 7 9 0 2.47

Hilton Grand Vacations presently has a consensus price target of $38.25, suggesting a potential upside of 5.02%. Marriott International has a consensus price target of $99.80, suggesting a potential downside of 5.30%. Given Hilton Grand Vacations’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Hilton Grand Vacations is more favorable than Marriott International.

Summary

Marriott International beats Hilton Grand Vacations on 8 of the 14 factors compared between the two stocks.

About Hilton Grand Vacations

Hilton Grand Vacations Inc. is a timeshare company that markets and sells vacation ownership intervals (VOIs), manages resorts in leisure and urban destinations, and operates a points-based vacation club. The Company operates its business across two segments: Real Estate Sales and Financing, and Resort Operations and Club Management. As of September 30, 2016, the Company had 46 resorts, representing 7,592 units, and approximately 265,000 Hilton Grand Vacations Club (the Club) members. Club members can exchange their Club points for stays at any resort or any property in the Hilton system of various brands across over 4,700 properties, as well as various vacation options, such as cruises and guided tours. VOI product allows customers to purchase a lifetime of vacations. The Company offers amenities, such as full kitchens, in-unit washers and dryers, spas and kids’ clubs along with beach-front locations.

About Marriott International

Marriott International, Inc. (Marriott International) is a lodging company. Marriott International operates in three business segments: North American Full-Service, North American Limited-Service and International. Its North American Full-Service segment includes its Luxury and Premium brands (JW Marriott, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, and Tribute Portfolio) located in the United States and Canada. Its North American Limited-Service segment includes Select brands (Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Element Hotels and Moxy Hotels) located in the United States and Canada. Its International segment includes JW Marriott, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Four Points, Aloft Hotels, AC Hotels by Marriott, Protea Hotels, Element Hotels, and Moxy Hotels located outside the United States and Canada.

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