Sotherly Hotels (NASDAQ: SOHO) and Apple Hospitality REIT (NYSE:APLE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Risk & Volatility

Sotherly Hotels has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Apple Hospitality REIT has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sotherly Hotels and Apple Hospitality REIT’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sotherly Hotels $152.55 million 0.54 $34.37 million ($0.01) -593.41
Apple Hospitality REIT $1.18 billion 3.58 $420.26 million $0.80 23.65

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

Dividends

Sotherly Hotels pays an annual dividend of $0.44 per share and has a dividend yield of 7.4%. Apple Hospitality REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.3%. Sotherly Hotels pays out -4,395.6% of its earnings in the form of a dividend. Apple Hospitality REIT pays out 150.0% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

26.5% of Sotherly Hotels shares are held by institutional investors. Comparatively, 49.2% of Apple Hospitality REIT shares are held by institutional investors. 13.8% of Sotherly Hotels shares are held by company insiders. Comparatively, 6.3% of Apple Hospitality REIT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Sotherly Hotels and Apple Hospitality REIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sotherly Hotels 1.59% 3.02% 0.60%
Apple Hospitality REIT 14.97% 5.05% 3.57%

Analyst Ratings

This is a summary of current ratings and price targets for Sotherly Hotels and Apple Hospitality REIT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sotherly Hotels 0 1 1 0 2.50
Apple Hospitality REIT 0 3 1 0 2.25

Sotherly Hotels presently has a consensus target price of $8.00, indicating a potential upside of 34.68%. Apple Hospitality REIT has a consensus target price of $20.00, indicating a potential upside of 5.71%. Given Sotherly Hotels’ stronger consensus rating and higher possible upside, analysts plainly believe Sotherly Hotels is more favorable than Apple Hospitality REIT.

Summary

Apple Hospitality REIT beats Sotherly Hotels on 9 of the 15 factors compared between the two stocks.

About Sotherly Hotels

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.

About Apple Hospitality REIT

Apple Hospitality REIT, Inc. is a hospitality real estate investment trust. The Company invests in real estate, primarily in the lodging sector, in the United States. As of September 13, 2017, the Company owned 237 hotels, with more than 30,000 guestrooms, diversified across the Hilton and Marriott families of brands with locations in urban, high-end suburban and developing markets across 33 states. As of December 31, 2016, the Company’s hotels included various brands, such as Hilton Garden Inn, Courtyard, Homewood Suites, Residence Inn, SpringHill Suites, TownePlace Suites, Fairfield Inn, Home2 Suites, Marriott, Embassy Suites, Hilton and Renaissance. As of December 31, 2016, the Company’s hotels were located in various states of the United States, such as Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, Ohio, South Carolina, Texas, Utah and Virginia.

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