RLJ Lodging Trust (NYSE: RLJ) and Hersha Hospitality Trust (NYSE:HT) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.

Volatility & Risk

RLJ Lodging Trust has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Hersha Hospitality Trust has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Dividends

RLJ Lodging Trust pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. Hersha Hospitality Trust pays an annual dividend of $1.12 per share and has a dividend yield of 6.0%. RLJ Lodging Trust pays out 30.3% of its earnings in the form of a dividend. Hersha Hospitality Trust pays out 48.7% 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. RLJ Lodging Trust has increased its dividend for 6 consecutive years and Hersha Hospitality Trust has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares RLJ Lodging Trust and Hersha Hospitality Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RLJ Lodging Trust $1.12 billion 2.43 $355.90 million $1.45 15.14
Hersha Hospitality Trust $471.75 million 1.66 $138.69 million $2.30 8.15

RLJ Lodging Trust has higher revenue and earnings than Hersha Hospitality Trust. Hersha Hospitality Trust is trading at a lower price-to-earnings ratio than RLJ Lodging Trust, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

98.4% of Hersha Hospitality Trust shares are owned by institutional investors. 2.3% of RLJ Lodging Trust shares are owned by company insiders. Comparatively, 8.1% of Hersha Hospitality Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for RLJ Lodging Trust and Hersha Hospitality Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RLJ Lodging Trust 1 4 6 0 2.45
Hersha Hospitality Trust 1 4 4 0 2.33

RLJ Lodging Trust currently has a consensus price target of $24.18, indicating a potential upside of 10.12%. Hersha Hospitality Trust has a consensus price target of $19.89, indicating a potential upside of 6.07%. Given RLJ Lodging Trust’s stronger consensus rating and higher possible upside, analysts clearly believe RLJ Lodging Trust is more favorable than Hersha Hospitality Trust.

Profitability

This table compares RLJ Lodging Trust and Hersha Hospitality Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RLJ Lodging Trust 16.12% 8.16% 4.52%
Hersha Hospitality Trust 22.77% 14.78% 6.13%

Summary

RLJ Lodging Trust beats Hersha Hospitality Trust on 9 of the 17 factors compared between the two stocks.

About RLJ Lodging Trust

RLJ Lodging Trust is a self-administered real estate investment trust. The Company is engaged in the acquisition of focused-service and compact full-service hotels. As of December 31, 2016, the Company owned 122 hotels with approximately 20,100 rooms, located in 21 states and the District of Columbia, and an interest in one mortgage loan secured by a hotel. Its hotels’ brand affiliations include Residence Inn, Courtyard, SpringHill Suites, Fairfield Inn & Suites, Marriott, Renaissance, Hilton Garden Inn, Hampton Inn/Hampton Inn & Suites, Embassy Suites, DoubleTree, Homewood Suites, Hilton, Hyatt House, Hyatt Place and Hyatt/Hyatt Centric. Its operating partnership is RLJ Lodging Trust, L.P. Its properties include Courtyard San Francisco, Courtyard Boulder Longmont, Residence Inn Longmont Boulder, DoubleTree Grand Key Resort, Courtyard Atlanta Buckhead, Courtyard Chicago Southeast Hammond, Courtyard Louisville Northeast, DoubleTree Hotel Columbia and Residence Inn Detroit Novi.

About Hersha Hospitality Trust

Hersha Hospitality Trust is a self-advised real estate investment trust (REIT). The Company invests primarily in institutional grade hotels in urban gateway markets, including New York, Washington, District of Columbia, Boston, Philadelphia, South Florida and select markets on the West Coast. As of July 20, 2017, the Company’s hotels included 51 hotels totaling 7,804 rooms located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company’s property brands include Marriott International, Hilton Hotels, Hyatt Hotels, Intercontinental Hotel Group, Wyndham Hotels and Hersha’s Independent Hotel Collection.

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