Head to Head Review: FelCor Lodging Trust (FCH) vs. Summit Hotel Properties (INN)

FelCor Lodging Trust (NYSE: FCH) and Summit Hotel Properties (NYSE:INN) are both small-cap financials companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Insider & Institutional Ownership

78.8% of FelCor Lodging Trust shares are owned by institutional investors. Comparatively, 95.7% of Summit Hotel Properties shares are owned by institutional investors. 3.3% of FelCor Lodging Trust shares are owned by insiders. Comparatively, 1.7% of Summit Hotel Properties shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares FelCor Lodging Trust and Summit Hotel Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FelCor Lodging Trust -0.66% N/A -0.35%
Summit Hotel Properties 20.21% 8.96% 5.28%

Dividends

FelCor Lodging Trust pays an annual dividend of $0.24 per share and has a dividend yield of 3.3%. Summit Hotel Properties pays an annual dividend of $0.68 per share and has a dividend yield of 4.5%. FelCor Lodging Trust pays out -51.1% of its earnings in the form of a dividend. Summit Hotel Properties pays out 82.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FelCor Lodging Trust has raised its dividend for 3 consecutive years and Summit Hotel Properties has raised its dividend for 4 consecutive years. Summit Hotel Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

FelCor Lodging Trust has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500. Comparatively, Summit Hotel Properties has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Valuation and Earnings

This table compares FelCor Lodging Trust and Summit Hotel Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FelCor Lodging Trust N/A N/A N/A ($0.47) -15.53
Summit Hotel Properties $473.93 million 3.34 $107.80 million $0.82 18.49

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for FelCor Lodging Trust and Summit Hotel Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FelCor Lodging Trust 0 2 0 0 2.00
Summit Hotel Properties 1 1 7 0 2.67

FelCor Lodging Trust currently has a consensus price target of $7.00, suggesting a potential downside of 4.11%. Summit Hotel Properties has a consensus price target of $17.19, suggesting a potential upside of 13.37%. Given Summit Hotel Properties’ stronger consensus rating and higher possible upside, analysts clearly believe Summit Hotel Properties is more favorable than FelCor Lodging Trust.

Summary

Summit Hotel Properties beats FelCor Lodging Trust on 12 of the 15 factors compared between the two stocks.

FelCor Lodging Trust Company Profile

FelCor Lodging Trust Incorporated is a real estate investment trust (REIT). The Company, through its subsidiary, FelCor Lodging Limited Partnership, held ownership interests in 39 hotels with 11,500 rooms, as of December 31, 2016. The Company sells, acquires, rebrands and redevelops hotels. As of December 31, 2016, the Company’s hotels were located in 14 states of the United States. The Company holds a portfolio of hotels managed by Hilton Worldwide (Hilton); Wyndham Worldwide (Wyndham); Marriott International Inc. (Marriott); InterContinental Hotels Group (IHG); AccorHotels Group, Highgate Hotels (Highgate), SBE and Aimbridge Hospitality. The Company’s hotels include Embassy Suites Atlanta-Buckhead; DoubleTree Suites by Hilton Austin; Embassy Suites Birmingham; The Fairmont Copley Plaza, Boston; Wyndham Boston Beacon Hill; Embassy Suites Boston-Marlborough, and Sheraton Burlington Hotel & Conference Center.

Summit Hotel Properties Company Profile

Summit Hotel Properties, Inc. is a real estate investment trust (REIT). The Company is focused primarily on owning premium-branded, select-service hotels in the Upscale segment of the United States lodging industry. The Company’s portfolio consists of 83 hotels with a total of 12,242 guestrooms located in 26 states. The Company’s hotels are located in markets, such as business and corporate headquarters, retail centers, airports and tourist attractions. The Company’s portfolio is located in urban and suburban markets. Based on total number of guestrooms, approximately 89% of the Company’s portfolio is positioned in over 50 metropolitan statistical areas (MSAs), and approximately 96% is located within over 100 MSAs. Based on total number of guestrooms, approximately 99% of the Company’s hotels operate under franchise brands owned by Marriott International, Inc., Hilton Worldwide, InterContinental Hotels Group, and an affiliate of Hyatt Hotels Corporation.

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