Chatham Lodging Trust (REIT) (NYSE:CLDT) versus Diamondrock Hospitality (DRH) Critical Survey

Diamondrock Hospitality (NYSE: DRH) and Chatham Lodging Trust (REIT) (NYSE:CLDT) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Profitability

This table compares Diamondrock Hospitality and Chatham Lodging Trust (REIT)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diamondrock Hospitality 11.47% 5.41% 3.23%
Chatham Lodging Trust (REIT) 8.73% 3.76% 1.97%

Dividends

Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.6%. Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 6.1%. Diamondrock Hospitality pays out 102.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Diamondrock Hospitality has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Diamondrock Hospitality and Chatham Lodging Trust (REIT), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diamondrock Hospitality 2 4 6 0 2.33
Chatham Lodging Trust (REIT) 0 5 1 0 2.17

Diamondrock Hospitality presently has a consensus target price of $12.00, indicating a potential upside of 10.09%. Chatham Lodging Trust (REIT) has a consensus target price of $20.30, indicating a potential downside of 5.49%. Given Diamondrock Hospitality’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Diamondrock Hospitality is more favorable than Chatham Lodging Trust (REIT).

Volatility & Risk

Diamondrock Hospitality has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, Chatham Lodging Trust (REIT) has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Insider and Institutional Ownership

81.6% of Chatham Lodging Trust (REIT) shares are owned by institutional investors. 1.1% of Diamondrock Hospitality shares are owned by insiders. Comparatively, 3.6% of Chatham Lodging Trust (REIT) shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Diamondrock Hospitality and Chatham Lodging Trust (REIT)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Diamondrock Hospitality $866.34 million 2.52 $242.01 million $0.49 22.24
Chatham Lodging Trust (REIT) $290.53 million 2.90 $106.69 million $0.66 32.55

Diamondrock Hospitality has higher revenue and earnings than Chatham Lodging Trust (REIT). Diamondrock Hospitality 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.

Summary

Diamondrock Hospitality beats Chatham Lodging Trust (REIT) on 11 of the 17 factors compared between the two stocks.

About Diamondrock Hospitality

DiamondRock Hospitality Company is a real estate investment trust (REIT). As of December 31, 2016, the Company owned a portfolio of 26 hotels and resorts that contains 9,472 guest rooms located in 17 different markets in North America and the United States Virgin Islands. Its business is to acquire, own, asset manage and renovate hotel properties in the United States. Its portfolio is concentrated in gateway cities and destination resort locations. It conducts its business through an umbrella partnership REIT (UPREIT) in, which its hotels are owned by subsidiaries of its operating partnership, DiamondRock Hospitality Limited Partnership. The Company is the general partner of its operating partnership and owns, either directly or indirectly, all of the limited partnership units of its operating partnership. The Company leases all of its domestic hotels to taxable REIT subsidiary, Bloodstone TRS, Inc. (TRS) lessees.

About Chatham Lodging Trust (REIT)

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).

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