Chatham Lodging Trust (REIT) (NYSE: CLDT) and Sotherly Hotels (NASDAQ:SOHO) are both small-cap finance 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.

Risk & Volatility

Chatham Lodging Trust (REIT) has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Sotherly Hotels has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Valuation and Earnings

This table compares Chatham Lodging Trust (REIT) and Sotherly Hotels’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chatham Lodging Trust (REIT) $290.53 million 2.99 $106.69 million $0.66 33.58
Sotherly Hotels $152.55 million 0.54 $34.37 million ($0.01) -591.41

Chatham Lodging Trust (REIT) has higher revenue and earnings than Sotherly Hotels. Sotherly Hotels is trading at a lower price-to-earnings ratio than Chatham Lodging Trust (REIT), indicating that it is currently the more affordable of the two stocks.

Dividends

Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 6.0%. Sotherly Hotels pays an annual dividend of $0.44 per share and has a dividend yield of 7.4%. Chatham Lodging Trust (REIT) pays out 200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sotherly Hotels pays out -4,395.6% of its earnings in the form of a dividend. Sotherly Hotels has raised its dividend for 2 consecutive years. Sotherly Hotels is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Chatham Lodging Trust (REIT) and Sotherly Hotels, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chatham Lodging Trust (REIT) 0 5 1 0 2.17
Sotherly Hotels 0 1 1 0 2.50

Chatham Lodging Trust (REIT) presently has a consensus price target of $20.30, indicating a potential downside of 8.39%. Sotherly Hotels has a consensus price target of $8.00, indicating a potential upside of 35.14%. Given Sotherly Hotels’ stronger consensus rating and higher probable upside, analysts clearly believe Sotherly Hotels is more favorable than Chatham Lodging Trust (REIT).

Insider & Institutional Ownership

81.6% of Chatham Lodging Trust (REIT) shares are owned by institutional investors. Comparatively, 26.5% of Sotherly Hotels shares are owned by institutional investors. 3.6% of Chatham Lodging Trust (REIT) shares are owned by insiders. Comparatively, 13.8% of Sotherly Hotels 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.

Profitability

This table compares Chatham Lodging Trust (REIT) and Sotherly Hotels’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chatham Lodging Trust (REIT) 8.73% 3.76% 1.97%
Sotherly Hotels 1.59% 3.02% 0.60%

Summary

Chatham Lodging Trust (REIT) beats Sotherly Hotels on 9 of the 15 factors compared between the two stocks.

Chatham Lodging Trust (REIT) Company Profile

Chatham Lodging Trust is a real estate investment trust. The Company invests primarily in upscale extended-stay and premium-branded select-service hotels. All of the Company’s assets are held by, and all of its operations are conducted through Chatham Lodging, L.P. (the Operating Partnership). As of December 31, 2016, the Company owned 38 hotels with an aggregate of 5,712 rooms located in 15 states and the District of Columbia. As of December 31, 2016, the Company’s hotels included upscale extended-stay hotels that operate under the Residence Inn by Marriott brand (15 hotels) and Homewood Suites by Hilton brand (nine hotels), as well as premium-branded select-service hotels that operate under the Courtyard by Marriott brand (four hotels), the Hampton Inn or Hampton Inn and Suites by Hilton brand (three hotels), the Hilton Garden Inn by Hilton brand (three hotels), the SpringHill Suites by Marriott brand (two hotels) and the Hyatt Place brand (two hotels).

Sotherly Hotels Company Profile

Sotherly Hotels Inc. is a self-managed and self-administered lodging real estate investment trust. The Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States. The Company operates through the hotel ownership segment. The Company conducts its operations through Sotherly Hotels LP, its Operating Partnership, of which the Company is the general partner. Its portfolio consists of approximately 10 full-service, mainly upscale and upper-upscale hotels located in over eight states with an aggregate of approximately 3,010 rooms and approximately 160,930 square feet of meeting space. All of these hotels are owned by subsidiaries of the Operating Partnership, approximately 10 operate under the Hilton, Crowne Plaza, DoubleTree and Sheraton brands, one is an independent hotel, and all are managed on a day to day basis by MHI Hotels Services, LLC, which does business as Chesapeake Hospitality.

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