Financial Review: MGM Growth Properties (MGP) and LaSalle Hotel Properties (LHO)

LaSalle Hotel Properties (NYSE: LHO) and MGM Growth Properties (NYSE:MGP) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Profitability

This table compares LaSalle Hotel Properties and MGM Growth Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LaSalle Hotel Properties 17.65% 8.11% 5.27%
MGM Growth Properties 5.46% 0.74% 0.43%

Volatility & Risk

LaSalle Hotel Properties has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, MGM Growth Properties has a beta of -1.41, meaning that its stock price is 241% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for LaSalle Hotel Properties and MGM Growth Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LaSalle Hotel Properties 7 6 0 0 1.46
MGM Growth Properties 0 2 5 0 2.71

LaSalle Hotel Properties currently has a consensus target price of $26.14, indicating a potential upside of 4.59%. MGM Growth Properties has a consensus target price of $31.14, indicating a potential upside of 18.64%. Given MGM Growth Properties’ stronger consensus rating and higher probable upside, analysts plainly believe MGM Growth Properties is more favorable than LaSalle Hotel Properties.

Dividends

LaSalle Hotel Properties pays an annual dividend of $1.80 per share and has a dividend yield of 7.2%. MGM Growth Properties pays an annual dividend of $1.68 per share and has a dividend yield of 6.4%. LaSalle Hotel Properties pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGM Growth Properties pays out 247.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LaSalle Hotel Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares LaSalle Hotel Properties and MGM Growth Properties’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LaSalle Hotel Properties $1.10 billion 2.56 $252.78 million $1.53 16.33
MGM Growth Properties $765.70 million 2.43 $29.93 million $0.68 38.60

LaSalle Hotel Properties has higher revenue and earnings than MGM Growth Properties. LaSalle Hotel Properties 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.

Summary

LaSalle Hotel Properties beats MGM Growth Properties on 10 of the 14 factors compared between the two stocks.

About LaSalle Hotel Properties

LaSalle Hotel Properties is a self-administered and self-managed real estate investment trust. The Company primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and urban business markets. As of December 31, 2016, the Company owned interests in 46 hotels with approximately 11,450 guest rooms located in nine states of the United States and the District of Columbia (DC). As of December 31, 2016, the Company’s properties included Hotel Amarano Burbank; Hilton San Diego Gaslamp Quarter; Hotel Solamar; San Diego Paradise Point Resort and Spa; The Hilton San Diego Resort and Spa; Harbor Court Hotel; The Marker San Francisco; Chamberlain West Hollywood; Le Montrose Suite Hotel; The Grafton on Sunset; Hotel George; Hotel Rouge; Mason & Rook Hotel; The Donovan; The Liaison Capitol Hill; The Marker Waterfront Resort; Hotel Chicago; Onyx Hotel; Park Central Hotel New York; The Heathman Hotel; Westin Philadelphia, and Lansdowne Resort.

About MGM Growth Properties

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.

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