Analyzing International Game Technology (IGT) and La Quinta (LQ)

International Game Technology (NYSE: IGT) and La Quinta (NYSE:LQ) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.

Earnings and Valuation

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This table compares International Game Technology and La Quinta’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
International Game Technology $4.94 billion 1.07 -$1.07 billion $1.52 17.11
La Quinta $980.63 million 2.31 $151.96 million $0.29 66.48

La Quinta has lower revenue, but higher earnings than International Game Technology. International Game Technology is trading at a lower price-to-earnings ratio than La Quinta, indicating that it is currently the more affordable of the two stocks.

Dividends

International Game Technology pays an annual dividend of $0.80 per share and has a dividend yield of 3.1%. La Quinta does not pay a dividend. International Game Technology pays out 52.6% of its earnings in the form of a dividend.

Profitability

This table compares International Game Technology and La Quinta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
International Game Technology -21.64% 10.28% 2.14%
La Quinta 15.50% 4.85% 1.19%

Institutional and Insider Ownership

40.7% of International Game Technology shares are owned by institutional investors. Comparatively, 99.1% of La Quinta shares are owned by institutional investors. 1.2% of International Game Technology shares are owned by insiders. Comparatively, 1.6% of La Quinta shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

International Game Technology has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, La Quinta has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for International Game Technology and La Quinta, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Game Technology 0 1 5 0 2.83
La Quinta 0 3 2 0 2.40

International Game Technology presently has a consensus target price of $31.25, indicating a potential upside of 20.15%. La Quinta has a consensus target price of $21.25, indicating a potential upside of 10.22%. Given International Game Technology’s stronger consensus rating and higher possible upside, equities analysts clearly believe International Game Technology is more favorable than La Quinta.

About International Game Technology

International Game Technology (IGT) is a global gaming company specializing in the design, development, manufacture, and marketing of casino-style gaming equipment, systems technology, and game content across multiple platforms: land-based, online real-money and social gaming. The Company is a supplier of gaming entertainment products worldwide. IGT operates in two segments: North America and International. North America consists of the Company’s operations in the United States and Canada, which comprised 78% of the revenue during the fiscal year ended September 30, 2013 (fiscal 2013). International consists of its operations in all other jurisdictions worldwide, which consists of 22% of the consolidated revenues in fiscal 2013. The Company recognized revenues in three categories, which includes Gaming Operations, Product Sales and Interactive.

About La Quinta

La Quinta Holdings Inc. is an owner, operator and franchisor of select-service hotels primarily serving the midscale and upper-midscale sectors under the La Quinta brand. The Company’s segments include owned hotels, franchise and management, and corporate and other. The owned hotels segment is engaged in the operation of owned hotel properties. The franchise and management segment is engaged in various license, franchise and management agreements relating to its owned and franchised hotels. As of December 31, 2016, its portfolio consisted of 888 hotels representing approximately 87,200 rooms located primarily across 48 states in the United States, as well as in Canada, Mexico, Honduras and Colombia, of which 322 hotels were owned and operated, and 566 were franchised. As of December 31, 2016, the Company had a pipeline of 248 franchised hotels in the United States, Mexico, Colombia, Nicaragua, Guatemala, Chile and El Salvador.

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