Critical Comparison: Texas Roadhouse (NASDAQ:TXRH) versus Marriott International (NASDAQ:MAR)

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

Institutional and Insider Ownership

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

Risk and Volatility

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

Profitability

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

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Roadhouse	$6.23 billion	2.14	$405.55 million	$6.25	32.47
Marriott International	$26.19 billion	3.58	$2.60 billion	$9.65	37.30

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.

Dividends

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

Analyst Ratings

This is a summary of current ratings and price targets for Texas Roadhouse and Marriott International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Roadhouse	0	13	10	0	2.43
Marriott International	0	9	10	1	2.60

Texas Roadhouse currently has a consensus target price of $208.48, suggesting a potential upside of 2.73%. Marriott International has a consensus target price of $386.65, suggesting a potential upside of 7.42%. Given Marriott International’s stronger consensus rating and higher probable upside, analysts clearly believe Marriott International is more favorable than Texas Roadhouse.

Summary

Marriott International beats Texas Roadhouse on 12 of the 17 factors compared between the two stocks.

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.

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.