7 DAYS GROUP (NYSE: SVN) and Extended Stay America (NYSE:STAY) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.
This table compares 7 DAYS GROUP and Extended Stay America’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|7 DAYS GROUP||N/A||N/A||N/A|
|Extended Stay America||5.83%||14.53%||4.74%|
This is a breakdown of recent ratings for 7 DAYS GROUP and Extended Stay America, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|7 DAYS GROUP||0||0||0||0||N/A|
|Extended Stay America||0||1||7||0||2.88|
Extended Stay America has a consensus price target of $20.78, suggesting a potential upside of 20.82%.
Extended Stay America pays an annual dividend of $0.84 per share and has a dividend yield of 4.9%. 7 DAYS GROUP does not pay a dividend. Extended Stay America pays out 215.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 7 DAYS GROUP has raised its dividend for 2 consecutive years.
Institutional & Insider Ownership
98.5% of Extended Stay America shares are owned by institutional investors. 0.6% of Extended Stay America shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares 7 DAYS GROUP and Extended Stay America’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|7 DAYS GROUP||N/A||N/A||N/A||$0.53||N/A|
|Extended Stay America||$1.27 billion||2.60||$69.93 million||$0.39||44.10|
Extended Stay America has higher revenue and earnings than 7 DAYS GROUP. 7 DAYS GROUP is trading at a lower price-to-earnings ratio than Extended Stay America, indicating that it is currently the more affordable of the two stocks.
Extended Stay America beats 7 DAYS GROUP on 8 of the 11 factors compared between the two stocks.
About 7 DAYS GROUP
7 Days Group Holdings Limited (7 Days Inn) is an offshore holding company structure and conducts its operations in the People’s Republic of China through its wholly owned subsidiary, 7 Days Inn (Shenzhen) Co., Ltd. (7 Days Shenzhen), and its subsidiaries and branches. The Company converts and operates limited service economy hotels across metropolitan areas in the People’s Republic of China. It offers accommodations and services. As of December 31, 2010, it had 568 hotels in operation, 247 of which were managed hotels, with 56,410 hotel rooms in 89 cities, and an additional 197 hotels with 19,345 hotel rooms under conversion. As of December 31, 2010, approximately 16.5 million members were registered with its 7 Days Club. In December 2011, the Company acquired Hunan Huatian Star Hotel Management Limited.
About Extended Stay America
Extended Stay America, Inc. is a owner/operator of company-branded hotels in North America. The Company operates in the extended stay lodging industry. The Company owns and operates approximately 700 hotel properties consisting of approximately 75,900 rooms located in 44 states across the United States of America and in Canada. The Company owns and operates hotels under the core brand, Extended Stay America. In addition, the Company owns and operates three Extended Stay Canada hotels, 49 hotels in the economy extended stay segment under the Crossland Economy Studios and Hometown Inn brands, and also manage two Extended Stay America hotels.
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