Sunstone Hotel Investors (NYSE:SHO) vs. Xenia Hotels & Resorts (NYSE:XHR) Critical Analysis

Sunstone Hotel Investors (NYSE:SHO) and Xenia Hotels & Resorts (NYSE:XHR) are both real estate companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Earnings & Valuation

This table compares Sunstone Hotel Investors and Xenia Hotels & Resorts”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunstone Hotel Investors	$960.13 million	2.51	$24.57 million	$0.22	58.80
Xenia Hotels & Resorts	$1.08 billion	1.77	$63.09 million	($0.07)	-295.39

Xenia Hotels & Resorts has higher revenue and earnings than Sunstone Hotel Investors. Xenia Hotels & Resorts is trading at a lower price-to-earnings ratio than Sunstone Hotel Investors, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Sunstone Hotel Investors has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Xenia Hotels & Resorts has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Dividends

Sunstone Hotel Investors pays an annual dividend of $0.36 per share and has a dividend yield of 2.8%. Xenia Hotels & Resorts pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Sunstone Hotel Investors pays out 163.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Xenia Hotels & Resorts pays out -800.0% of its earnings in the form of a dividend. Sunstone Hotel Investors has raised its dividend for 2 consecutive years and Xenia Hotels & Resorts has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Sunstone Hotel Investors and Xenia Hotels & Resorts, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunstone Hotel Investors	1	6	1	1	2.22
Xenia Hotels & Resorts	0	2	2	0	2.50

Sunstone Hotel Investors currently has a consensus target price of $11.43, suggesting a potential downside of 11.66%. Xenia Hotels & Resorts has a consensus target price of $20.12, suggesting a potential downside of 2.67%. Given Xenia Hotels & Resorts’ stronger consensus rating and higher probable upside, analysts clearly believe Xenia Hotels & Resorts is more favorable than Sunstone Hotel Investors.

Institutional and Insider Ownership

99.4% of Sunstone Hotel Investors shares are owned by institutional investors. Comparatively, 92.4% of Xenia Hotels & Resorts shares are owned by institutional investors. 1.4% of Sunstone Hotel Investors shares are owned by company insiders. Comparatively, 4.4% of Xenia Hotels & Resorts shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Sunstone Hotel Investors and Xenia Hotels & Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sunstone Hotel Investors	5.30%	3.21%	1.75%
Xenia Hotels & Resorts	-0.66%	-0.61%	-0.26%

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of the date of this release owns 14 hotels comprised of 6,675 rooms, the majority of which are operated under nationally recognized brands. Sunstone's strategy is to create long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate.

About Xenia Hotels & Resorts

Xenia Hotels & Resorts, Inc. is a real estate investment trust, which engages in the provision of investment in luxury and upper upscale hotels and resorts. It also owns a diversified portfolio of lodging properties operated by Marriott, Kimpton, Hyatt, Aston, Fairmong, and Loews. The company was founded in 2007 and is headquartered in Orlando, FL.