Host Hotels & Resorts (NYSE: HST) and Sunstone Hotel Investors (NYSE:SHO) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Host Hotels & Resorts 11.11% 8.44% 5.11%
Sunstone Hotel Investors 13.78% 6.20% 3.98%

Dividends

Host Hotels & Resorts pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. Sunstone Hotel Investors pays an annual dividend of C$0.20 per share and has a dividend yield of 1.2%. Host Hotels & Resorts pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunstone Hotel Investors pays out 29.9% of its earnings in the form of a dividend. Host Hotels & Resorts has increased its dividend for 6 consecutive years. Host Hotels & Resorts is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Host Hotels & Resorts and Sunstone Hotel Investors’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Host Hotels & Resorts $5.43 billion 2.72 $762.00 million $0.80 24.99
Sunstone Hotel Investors $1.19 billion 3.13 $134.19 million C$0.67 24.66

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

Risk & Volatility

Host Hotels & Resorts has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Host Hotels & Resorts and Sunstone Hotel Investors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Host Hotels & Resorts 1 8 6 0 2.33
Sunstone Hotel Investors 2 9 2 0 2.00

Host Hotels & Resorts presently has a consensus price target of $19.50, suggesting a potential downside of 2.45%. Sunstone Hotel Investors has a consensus price target of C$15.89, suggesting a potential downside of 3.82%. Given Host Hotels & Resorts’ stronger consensus rating and higher probable upside, research analysts clearly believe Host Hotels & Resorts is more favorable than Sunstone Hotel Investors.

Summary

Host Hotels & Resorts beats Sunstone Hotel Investors on 11 of the 15 factors compared between the two stocks.

About Host Hotels & Resorts

Host Hotels & Resorts, Inc. (Host Inc.) operates as a self-managed and self-administered real estate investment trust (REIT). The Company operates through hotel ownership segment. The Company operates through hotel ownership segment. The Company owned properties and conducted operations through Host Hotels & Resorts, L.P. (Host L.P.), of which Host Inc. was the general partner and of which it held approximately 99% of the partnership interests (OP units), as of December 31, 2016. As of February 20, 2017, its lodging portfolio consisted of 96 primarily luxury and upper-upscale hotels containing approximately 53,500 rooms, with the majority located in the United States, and with seven of the properties located outside of the United States in Australia, Brazil, Canada and Mexico. In addition, it owns non-controlling interests in two international joint ventures: approximately a 33% interest in a joint venture in Europe, and a 9% indirect interest, through joint ventures in India.

About Sunstone Hotel Investors

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‚Äôs 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.

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