Pebblebrook Hotel Trust (PEB) and Chatham Lodging Trust (REIT) (NYSE:CLDT) Critical Review

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

Institutional & Insider Ownership

81.6% of Chatham Lodging Trust (REIT) shares are held by institutional investors. 2.0% of Pebblebrook Hotel Trust shares are held by company insiders. Comparatively, 3.6% of Chatham Lodging Trust (REIT) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Pebblebrook Hotel Trust 12.98% 6.63% 3.78%
Chatham Lodging Trust (REIT) 8.73% 3.76% 1.97%

Valuation & Earnings

This table compares Pebblebrook Hotel Trust and Chatham Lodging Trust (REIT)’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pebblebrook Hotel Trust $796.77 million 3.09 $242.63 million $1.29 27.67
Chatham Lodging Trust (REIT) $290.53 million 2.90 $106.69 million $0.66 32.55

Pebblebrook Hotel Trust has higher revenue and earnings than Chatham Lodging Trust (REIT). Pebblebrook Hotel Trust 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.

Dividends

Pebblebrook Hotel Trust pays an annual dividend of $1.52 per share and has a dividend yield of 4.3%. Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 6.1%. Pebblebrook Hotel Trust pays out 117.8% 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. Pebblebrook Hotel Trust has increased its dividend for 2 consecutive years and Chatham Lodging Trust (REIT) has increased its dividend for 4 consecutive years. Chatham Lodging Trust (REIT) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Pebblebrook Hotel Trust has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Chatham Lodging Trust (REIT) has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Pebblebrook Hotel Trust and Chatham Lodging Trust (REIT), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pebblebrook Hotel Trust 2 3 5 0 2.30
Chatham Lodging Trust (REIT) 0 5 1 0 2.17

Pebblebrook Hotel Trust presently has a consensus price target of $35.31, suggesting a potential downside of 1.06%. Chatham Lodging Trust (REIT) has a consensus price target of $20.30, suggesting a potential downside of 5.49%. Given Pebblebrook Hotel Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe Pebblebrook Hotel Trust is more favorable than Chatham Lodging Trust (REIT).

Summary

Pebblebrook Hotel Trust beats Chatham Lodging Trust (REIT) on 13 of the 17 factors compared between the two stocks.

Pebblebrook Hotel Trust Company Profile

Pebblebrook Hotel Trust is an internally managed hotel investment company. The Company is a real estate investment trust (REIT) that acquires and invests in hotel properties located primarily in cities of the United States. As of December 31, 2016, the Company owned 29 hotels with a total of 7,219 guest rooms. The hotels are located in the markets: Atlanta (Buckhead), Georgia; Boston, Massachusetts; Miami (Coral Gables), Florida; Minneapolis, Minnesota; Naples, Florida; Nashville, Tennessee; New York, New York; Philadelphia, Pennsylvania; Portland, Oregon; San Diego, California; San Francisco, California; Santa Monica, California; Seattle, Washington; Stevenson, Washington; Washington, D.C.; West Hollywood, California, and Los Angeles (Beverly Hills), California. The Company’s assets are held by, and all of the operations are conducted through, Pebblebrook Hotel, L.P. (the Operating Partnership).

Chatham Lodging Trust (REIT) Company Profile

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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