Reviewing Marriott International (NASDAQ:MAR) and Texas Roadhouse (NASDAQ:TXRH)

Marriott International (NASDAQ:MAR) and Texas Roadhouse (NASDAQ:TXRH) are both large-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, earnings, valuation, profitability, analyst recommendations and dividends.

Insider and Institutional Ownership

70.7% of Marriott International shares are owned by institutional investors. Comparatively, 94.8% of Texas Roadhouse shares are owned by institutional investors. 11.4% of Marriott International shares are owned by insiders. Comparatively, 0.5% of Texas Roadhouse shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Marriott International and Texas Roadhouse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marriott International	9.62%	-75.81%	10.56%
Texas Roadhouse	6.63%	27.20%	11.75%

Volatility and Risk

Marriott International has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, Texas Roadhouse has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Marriott International and Texas Roadhouse, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marriott International	0	9	10	1	2.60
Texas Roadhouse	0	13	10	1	2.50

Marriott International presently has a consensus price target of $385.65, indicating a potential upside of 7.70%. Texas Roadhouse has a consensus price target of $208.48, indicating a potential upside of 2.10%. Given Marriott International’s stronger consensus rating and higher possible upside, analysts plainly believe Marriott International is more favorable than Texas Roadhouse.

Dividends

Marriott International pays an annual dividend of $2.92 per share and has a dividend yield of 0.8%. Texas Roadhouse pays an annual dividend of $3.00 per share and has a dividend yield of 1.5%. Marriott International pays out 30.3% of its earnings in the form of a dividend. Texas Roadhouse pays out 48.0% 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. Marriott International has increased its dividend for 3 consecutive years and Texas Roadhouse has increased its dividend for 6 consecutive years. Texas Roadhouse is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Marriott International and Texas Roadhouse”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marriott International	$26.19 billion	3.57	$2.60 billion	$9.65	37.11
Texas Roadhouse	$5.88 billion	2.28	$405.55 million	$6.25	32.67

Marriott International has higher revenue and earnings than Texas Roadhouse. Texas Roadhouse is trading at a lower price-to-earnings ratio than Marriott International, indicating that it is currently the more affordable of the two stocks.

Summary

Marriott International beats Texas Roadhouse on 11 of the 16 factors compared between the two stocks.

About Marriott International

Marriott International, Inc. engages in operating, franchising, and licensing hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under the JW Marriott, The Ritz-Carlton, The Luxury Collection, W Hotels, St. Regis, EDITION, Bvlgari, Marriott Hotels, Sheraton, Westin, Autograph Collection, Renaissance Hotels, Le Méridien, Delta Hotels by Marriott, Tribute Portfolio, Gaylord Hotels, Design Hotels, Marriott Executive Apartments, Apartments by Marriott Bonvoy, Courtyard by Marriott, Fairfield by Marriott, Residence Inn by Marriott, SpringHill Suites by Marriott, Four Points by Sheraton, TownePlace Suites by Marriott, Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, Element Hotels, Protea Hotels by Marriott, City Express by Marriott, and St. Regis Longboat Key brand names, as well as operates residences, timeshares, and yachts. The company was founded in 1927 and is headquartered in Bethesda, Maryland.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.