Contrasting InterContinental Hotels Group (IHG) and MGM Resorts International (MGM)

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MGM Resorts International (NYSE: IHG) and InterContinental Hotels Group (NYSE:IHG) are both large-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Earnings and Valuation

This table compares MGM Resorts International and InterContinental Hotels Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MGM Resorts International $10.77 billion 1.45 $1.96 billion $1.02 28.46
InterContinental Hotels Group $1.78 billion 6.48 $592.00 million $2.43 24.94

MGM Resorts International has higher revenue and earnings than InterContinental Hotels Group. InterContinental Hotels Group is trading at a lower price-to-earnings ratio than MGM Resorts International, indicating that it is currently the more affordable of the two stocks.

Dividends

MGM Resorts International pays an annual dividend of $0.48 per share and has a dividend yield of 1.7%. InterContinental Hotels Group pays an annual dividend of $1.02 per share and has a dividend yield of 1.7%. MGM Resorts International pays out 47.1% of its earnings in the form of a dividend. InterContinental Hotels Group pays out 42.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. InterContinental Hotels Group has increased its dividend for 5 consecutive years. InterContinental Hotels Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares MGM Resorts International and InterContinental Hotels Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGM Resorts International 17.11% 5.07% 1.92%
InterContinental Hotels Group N/A N/A N/A

Risk & Volatility

MGM Resorts International has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, InterContinental Hotels Group has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for MGM Resorts International and InterContinental Hotels Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGM Resorts International 0 4 10 0 2.71
InterContinental Hotels Group 0 4 2 0 2.33

MGM Resorts International currently has a consensus price target of $37.23, indicating a potential upside of 28.25%. InterContinental Hotels Group has a consensus price target of $64.19, indicating a potential upside of 5.91%. Given MGM Resorts International’s stronger consensus rating and higher possible upside, research analysts plainly believe MGM Resorts International is more favorable than InterContinental Hotels Group.

Institutional and Insider Ownership

87.3% of MGM Resorts International shares are owned by institutional investors. Comparatively, 6.4% of InterContinental Hotels Group shares are owned by institutional investors. 0.4% of MGM Resorts International shares are owned 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.

Summary

MGM Resorts International beats InterContinental Hotels Group on 12 of the 17 factors compared between the two stocks.

About MGM Resorts International

MGM Resorts International, through its subsidiaries, owns and operates integrated casino, hotel, and entertainment resorts in the United States and China. The company operates through two segments, Domestic Resorts and MGM China. Its casino resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. Its casino operations include various slots, table games, and race and sports book wagering. The company operates 14 resorts in the United States; and MGM Macau resort and casino in China, as well as develops an integrated casino, hotel, and entertainment resort on the Cotai Strip, Macau. The company also owns and operates Shadow Creek golf course, Primm Valley Golf Club, and Fallen Oak golf course. The company serves premium gaming customers; leisure and wholesale travel customers; business travelers; and group customers, including conventions, trade associations, and small meetings. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

About InterContinental Hotels Group

InterContinental Hotels Group PLC owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. The company operates hotels, resorts, and restaurants under the InterContinental, Kimpton, Hotel Indigo, EVEN, HUALUXE, Crowne Plaza, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, Holiday Inn Resort, avid, Staybridge Suites, and Candlewood Suites brands. It also provides IHG Rewards Club, a hotel loyalty program. As of December 31, 2017, the company had 5,348 hotels with 798,075 rooms. InterContinental Hotels Group PLC was founded in 1967 and is headquartered in Denham, the United Kingdom.

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