Financial Analysis: LaSalle Hotel Properties (LHO) and RLJ Lodging Trust (RLJ)

LaSalle Hotel Properties (NYSE: LHO) and RLJ Lodging Trust (NYSE:RLJ) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for LaSalle Hotel Properties and RLJ Lodging Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LaSalle Hotel Properties 2 11 0 0 1.85
RLJ Lodging Trust 1 5 6 0 2.42

LaSalle Hotel Properties currently has a consensus target price of $29.00, indicating a potential upside of 1.68%. RLJ Lodging Trust has a consensus target price of $24.00, indicating a potential upside of 13.37%. Given RLJ Lodging Trust’s stronger consensus rating and higher possible upside, analysts plainly believe RLJ Lodging Trust is more favorable than LaSalle Hotel Properties.

Volatility & Risk

LaSalle Hotel Properties has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, RLJ Lodging Trust has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Valuation and Earnings

This table compares LaSalle Hotel Properties and RLJ Lodging Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
LaSalle Hotel Properties $1.23 billion 2.63 $252.78 million $1.62 17.60
RLJ Lodging Trust $1.16 billion 2.27 $200.35 million $1.13 18.73

LaSalle Hotel Properties has higher revenue and earnings than RLJ Lodging Trust. LaSalle Hotel Properties 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.

Dividends

LaSalle Hotel Properties pays an annual dividend of $1.80 per share and has a dividend yield of 6.3%. RLJ Lodging Trust pays an annual dividend of $0.44 per share and has a dividend yield of 2.1%. LaSalle Hotel Properties pays out 111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RLJ Lodging Trust pays out 38.9% of its earnings in the form of a dividend. LaSalle Hotel Properties has raised its dividend for 6 consecutive years and RLJ Lodging Trust has raised its dividend for 5 consecutive years. LaSalle Hotel Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares LaSalle Hotel Properties and RLJ Lodging Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LaSalle Hotel Properties 18.10% 8.31% 5.40%
RLJ Lodging Trust 12.30% 6.44% 3.58%

Summary

LaSalle Hotel Properties beats RLJ Lodging Trust on 10 of the 15 factors compared between the two stocks.

LaSalle Hotel Properties Company Profile

LaSalle Hotel Properties is a self-administered and self-managed real estate investment trust. The Company primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and urban business markets. As of December 31, 2016, the Company owned interests in 46 hotels with approximately 11,450 guest rooms located in nine states of the United States and the District of Columbia (DC). As of December 31, 2016, the Company’s properties included Hotel Amarano Burbank; Hilton San Diego Gaslamp Quarter; Hotel Solamar; San Diego Paradise Point Resort and Spa; The Hilton San Diego Resort and Spa; Harbor Court Hotel; The Marker San Francisco; Chamberlain West Hollywood; Le Montrose Suite Hotel; The Grafton on Sunset; Hotel George; Hotel Rouge; Mason & Rook Hotel; The Donovan; The Liaison Capitol Hill; The Marker Waterfront Resort; Hotel Chicago; Onyx Hotel; Park Central Hotel New York; The Heathman Hotel; Westin Philadelphia, and Lansdowne Resort.

RLJ Lodging Trust Company Profile

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.

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