Comparing Cheesecake Factory (NASDAQ:CAKE) & Hilton Worldwide (NYSE:HLT)

Hilton Worldwide (NYSE:HLT) and Cheesecake Factory (NASDAQ:CAKE) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Dividends

Hilton Worldwide pays an annual dividend of $0.60 per share and has a dividend yield of 0.2%. Cheesecake Factory pays an annual dividend of $1.20 per share and has a dividend yield of 1.1%. Hilton Worldwide pays out 8.1% of its earnings in the form of a dividend. Cheesecake Factory pays out 28.4% 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.

Risk and Volatility

Hilton Worldwide has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares Hilton Worldwide and Cheesecake Factory’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hilton Worldwide	13.40%	-33.78%	12.16%
Cheesecake Factory	5.20%	46.95%	6.74%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Hilton Worldwide and Cheesecake Factory, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hilton Worldwide	0	8	16	2	2.77
Cheesecake Factory	2	12	5	1	2.25

Hilton Worldwide currently has a consensus price target of $363.57, suggesting a potential upside of 1.86%. Cheesecake Factory has a consensus price target of $95.47, suggesting a potential downside of 15.25%. Given Hilton Worldwide’s stronger consensus rating and higher possible upside, equities analysts plainly believe Hilton Worldwide is more favorable than Cheesecake Factory.

Institutional and Insider Ownership

95.9% of Hilton Worldwide shares are owned by institutional investors. Comparatively, 94.5% of Cheesecake Factory shares are owned by institutional investors. 2.7% of Hilton Worldwide shares are owned by insiders. Comparatively, 8.0% of Cheesecake Factory shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Hilton Worldwide and Cheesecake Factory”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hilton Worldwide	$12.04 billion	6.60	$1.46 billion	$7.40	48.23
Cheesecake Factory	$3.75 billion	1.49	$148.43 million	$4.22	26.69

Hilton Worldwide has higher revenue and earnings than Cheesecake Factory. Cheesecake Factory is trading at a lower price-to-earnings ratio than Hilton Worldwide, indicating that it is currently the more affordable of the two stocks.

Summary

Hilton Worldwide beats Cheesecake Factory on 14 of the 17 factors compared between the two stocks.

About Hilton Worldwide

Hilton Worldwide Holdings Inc., a hospitality company, engages in managing, franchising, owning, and leasing hotels and resorts. It operates through two segments, Management and Franchise, and Ownership. The company engages in the hotel management and licensing of its brands. It operates luxury hotels under the Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, and Conrad Hotels & Resorts brand; lifestyle hotels under the Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton, and Motto by Hilton brand; full service hotels under the Signia by Hilton, Hilton Hotels & Resorts, and DoubleTree by Hilton brand; service hotels under the Hilton Garden Inn, Hampton by Hilton, and Tru by Hilton brand; all-suite hotels under the Embassy Suites by Hilton, Homewood Suites by Hilton, and Home2 Suites by Hilton brand; and economy hotel under the Spark by Hilton brand, as well as Hilton Grand Vacations. The company operates in North America, South America, and Central America, including various Caribbean nations; Europe, the Middle East, and Africa; and the Asia Pacific. The company was founded in 1919 and is headquartered in McLean, Virginia.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.