Critical Analysis: Sunstone Hotel Investors (SHO) versus Hospitality Properties Trust (HPT)
Sunstone Hotel Investors (NYSE: SHO) and Hospitality Properties Trust (NASDAQ:HPT) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.
This is a breakdown of current recommendations for Sunstone Hotel Investors and Hospitality Properties Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sunstone Hotel Investors||3||5||2||0||1.90|
|Hospitality Properties Trust||0||3||4||0||2.57|
Sunstone Hotel Investors presently has a consensus price target of $15.56, indicating a potential downside of 1.80%. Hospitality Properties Trust has a consensus price target of $32.33, indicating a potential upside of 15.27%. Given Hospitality Properties Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Hospitality Properties Trust is more favorable than Sunstone Hotel Investors.
Volatility and Risk
Sunstone Hotel Investors has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Hospitality Properties Trust has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.
Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. Hospitality Properties Trust pays an annual dividend of $2.08 per share and has a dividend yield of 7.4%. Sunstone Hotel Investors pays out 25.6% of its earnings in the form of a dividend. Hospitality Properties Trust pays out 176.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
76.3% of Hospitality Properties Trust shares are owned by institutional investors. 0.8% of Sunstone Hotel Investors shares are owned by insiders. Comparatively, 1.7% of Hospitality Properties Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Sunstone Hotel Investors and Hospitality Properties Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sunstone Hotel Investors||$1.19 billion||3.00||$344.05 million||$0.78||20.31|
|Hospitality Properties Trust||$2.08 billion||2.22||$749.37 million||$1.18||23.77|
Hospitality Properties Trust has higher revenue and earnings than Sunstone Hotel Investors. Sunstone Hotel Investors is trading at a lower price-to-earnings ratio than Hospitality Properties Trust, indicating that it is currently the more affordable of the two stocks.
This table compares Sunstone Hotel Investors and Hospitality Properties Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sunstone Hotel Investors||15.41%||7.70%||4.91%|
|Hospitality Properties Trust||10.22%||7.53%||3.16%|
Hospitality Properties Trust beats Sunstone Hotel Investors on 10 of the 16 factors compared between the two stocks.
Sunstone Hotel Investors Company Profile
Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered real estate investment trust. The Company’s primary business is to acquire, own, asset manage and renovate primarily urban and resort upper upscale hotels in the United States. It operates through hotel ownership segment. It owns primarily urban and resort upper upscale hotels in the United States. The Company’s hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. As of July 26, 2017 the Company has interest in 27 hotels, including 13,202 rooms. The Company’s hotels are located in gateway markets, such as Boston, New York, Washington, District of Columbia (DC)/Baltimore, Chicago, Orlando, New Orleans, San Francisco, Los Angeles, Orange County and San Diego.
Hospitality Properties Trust Company Profile
Hospitality Properties Trust is a real estate investment trust. The Company’s segments include hotel investments, travel center investments and corporate. As of December 31, 2016, the Company owned 306 hotels with 46,583 rooms or suites, and 198 travel centers. As of December 31, 2016, the Company’s properties were located in 45 states in the United States, Canada and Puerto Rico. As of December 31, 2016, the Company’s hotels were operated as Courtyard by Marriott, Royal Sonesta, Sonesta Hotels & Resorts, Candlewood Suites, Residence Inn by Marriott, Sonesta ES Suites, Crowne Plaza Hotels & Resorts, Staybridge Suites, Hyatt Place, Wyndham Grand, Wyndham Hotels & Resorts, InterContinental Hotels & Resorts, Marriott Hotels and Resorts, the Clift Hotel, Radisson Hotels & Resorts, Kimpton Hotels & Restaurants, TownePlace Suites by Marriott, Hawthorn Suites, Country Inns & Suites by Carlson, Holiday Inn Hotels & Resorts, SpringHill Suites by Marriott, and Park Plaza Hotels & Resorts.
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