Diamondrock Hospitality (DRH) vs. Apple Hospitality REIT (APLE) Financial Review

Apple Hospitality REIT (NYSE: APLE) and Diamondrock Hospitality (NYSE:DRH) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, earnings, institutional ownership, profitability, risk, dividends and analyst recommendations.

Insider & Institutional Ownership

49.0% of Apple Hospitality REIT shares are owned by institutional investors. 6.3% of Apple Hospitality REIT shares are owned by company insiders. Comparatively, 1.1% of Diamondrock Hospitality shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Apple Hospitality REIT has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Diamondrock Hospitality has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Apple Hospitality REIT and Diamondrock Hospitality, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apple Hospitality REIT 0 3 1 0 2.25
Diamondrock Hospitality 2 4 6 0 2.33

Apple Hospitality REIT currently has a consensus target price of $20.00, suggesting a potential upside of 5.82%. Diamondrock Hospitality has a consensus target price of $12.00, suggesting a potential upside of 10.09%. Given Diamondrock Hospitality’s stronger consensus rating and higher possible upside, analysts clearly believe Diamondrock Hospitality is more favorable than Apple Hospitality REIT.

Profitability

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

Net Margins Return on Equity Return on Assets
Apple Hospitality REIT 14.97% 5.05% 3.57%
Diamondrock Hospitality 11.47% 5.41% 3.23%

Valuation & Earnings

This table compares Apple Hospitality REIT and Diamondrock Hospitality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Apple Hospitality REIT $1.18 billion 3.57 $420.26 million $0.80 23.63
Diamondrock Hospitality $866.34 million 2.52 $242.01 million $0.49 22.24

Apple Hospitality REIT has higher revenue and earnings than Diamondrock Hospitality. Diamondrock Hospitality 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

Apple Hospitality REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.3%. Diamondrock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.6%. 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. 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.

Summary

Apple Hospitality REIT beats Diamondrock Hospitality on 9 of the 16 factors compared between the two stocks.

Apple Hospitality REIT Company Profile

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.

Diamondrock Hospitality Company Profile

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.

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