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Why Morgans Hotel Is Poised to Pull Back

By Brian D. Pacampara, CFA - Apr 10, 2013 at 6:59PM

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Market-lagging returns could be written in this 1-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, hotel developer Morgans Hotel Group (NASDAQ: MHGC) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Morgans Hotel and see what CAPS investors are saying about the stock right now.

Morgans Hotel facts


Headquarters (founded)

New York, N.Y. (2005)

Market Cap

$203.1 million



Trailing-12-Month Revenue

$189.9 million


CEO Michael Gross

CFO Richard Szymanski

Return on Capital (average, past 3 years)



$5.9 million/$538.1 million


Boutique Hotels & Resorts International

Ian Schrager

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 40% of the 117 members who have rated Morgans Hotel believe the stock will underperform the S&P 500 going forward.

A couple of months ago, one of those Fools, All-Star NovaTodd, succinctly summed up the Morgans Hotel bear case for our community:

Sales per employee is a paltry $41,000, and these guys have not been FCF positive since 2005. Sales and Book Value have both been in decline since 2007, and the company carries $500 million in debt (more than two times TTM Revenue). It's hard to find anything to like with this one.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

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