Analyzing Service Properties Trust (NASDAQ:SVC) and Summit Hotel Properties (NYSE:INN)

Service Properties Trust (NASDAQ:SVC) and Summit Hotel Properties (NYSE:INN) are both small-cap real estate companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Valuation and Earnings

This table compares Service Properties Trust and Summit Hotel Properties”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Service Properties Trust	$1.81 billion	0.37	-$202.32 million	($7.70)	-0.68
Summit Hotel Properties	$729.47 million	1.03	-$7.69 million	($0.19)	-36.71

Summit Hotel Properties has lower revenue, but higher earnings than Service Properties Trust. Summit Hotel Properties is trading at a lower price-to-earnings ratio than Service Properties Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Service Properties Trust and Summit Hotel Properties, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Service Properties Trust	1	2	3	0	2.33
Summit Hotel Properties	1	1	2	0	2.25

Service Properties Trust presently has a consensus price target of $12.05, indicating a potential upside of 131.73%. Summit Hotel Properties has a consensus price target of $6.00, indicating a potential downside of 13.98%. Given Service Properties Trust’s stronger consensus rating and higher probable upside, research analysts clearly believe Service Properties Trust is more favorable than Summit Hotel Properties.

Profitability

This table compares Service Properties Trust and Summit Hotel Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Service Properties Trust	-25.44%	-65.18%	-6.66%
Summit Hotel Properties	-0.99%	-0.60%	-0.26%

Dividends

Service Properties Trust pays an annual dividend of $0.20 per share and has a dividend yield of 3.8%. Summit Hotel Properties pays an annual dividend of $0.32 per share and has a dividend yield of 4.6%. Service Properties Trust pays out -2.6% of its earnings in the form of a dividend. Summit Hotel Properties pays out -168.4% 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. Summit Hotel Properties has raised its dividend for 2 consecutive years. Summit Hotel Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Service Properties Trust has a beta of 1.78, meaning that its share price is 78% more volatile than the S&P 500. Comparatively, Summit Hotel Properties has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Insider & Institutional Ownership

77.6% of Service Properties Trust shares are owned by institutional investors. Comparatively, 96.5% of Summit Hotel Properties shares are owned by institutional investors. 1.6% of Service Properties Trust shares are owned by insiders. Comparatively, 4.3% of Summit Hotel Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Summit Hotel Properties beats Service Properties Trust on 11 of the 17 factors compared between the two stocks.

About Service Properties Trust

Service Properties Trust (Nasdaq: SVC) is a real estate investment trust with over $11 billion invested in two asset categories: hotels and service-focused retail net lease properties. As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service. As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States. SVC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. SVC is headquartered in Newton, MA.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded lodging properties with efficient operating models primarily in the upscale segment of the lodging industry. As of November 1, 2023, the Company’s portfolio consisted of 101 assets, 57 of which are wholly owned, with a total of 15,035 guestrooms located in 24 states.