Analyzing Chatham Lodging Trust (CLDT) and Sunstone Hotel Investors (SHO)

Chatham Lodging Trust (NYSE: CLDT) and Sunstone Hotel Investors (NYSE:SHO) are both financials companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, valuation, earnings and dividends.

Volatility & Risk

Chatham Lodging Trust has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares Chatham Lodging Trust and Sunstone Hotel Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chatham Lodging Trust 9.03% 3.90% 2.04%
Sunstone Hotel Investors 12.53% 5.56% 3.56%

Institutional & Insider Ownership

82.5% of Chatham Lodging Trust shares are held by institutional investors. 3.6% of Chatham Lodging Trust shares are held by company insiders. Comparatively, 0.8% of Sunstone Hotel Investors shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chatham Lodging Trust $293.82 million 3.22 $31.48 million $0.67 31.10
Sunstone Hotel Investors $1.19 billion 2.81 $145.37 million $0.57 26.11

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

Dividends

Chatham Lodging Trust pays an annual dividend of $1.32 per share and has a dividend yield of 6.3%. Sunstone Hotel Investors pays an annual dividend of $2.32 per share and has a dividend yield of 15.6%. Chatham Lodging Trust pays out 197.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunstone Hotel Investors pays out 407.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunstone Hotel Investors has increased its dividend for 3 consecutive years. Sunstone Hotel Investors is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Chatham Lodging Trust and Sunstone Hotel Investors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chatham Lodging Trust 0 6 1 0 2.14
Sunstone Hotel Investors 3 7 2 0 1.92

Chatham Lodging Trust currently has a consensus target price of $20.70, suggesting a potential downside of 0.67%. Sunstone Hotel Investors has a consensus target price of $15.94, suggesting a potential upside of 7.11%. Given Sunstone Hotel Investors’ higher probable upside, analysts plainly believe Sunstone Hotel Investors is more favorable than Chatham Lodging Trust.

Summary

Sunstone Hotel Investors beats Chatham Lodging Trust on 10 of the 17 factors compared between the two stocks.

Chatham Lodging Trust 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). The Company owned 41 hotels with an aggregate of 6,163 rooms located in 16 states and the District of Columbia. 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).

Sunstone Hotel Investors Company Profile

Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is to acquire, own, asset manage and renovate primarily urban and resort upper upscale hotels in the United States. The Company operates through hotel ownership segment. The Company owns primarily urban and resort upper upscale hotels in the United States. The Company’s hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. As of January 10, 2018, the Company had interest in 25 hotels, including 12,450 rooms. The Company’s hotels are located in gateway markets, such as Boston, New York, Washington, District of Columbia (DC)/Baltimore, Chicago, Orlando, New Orleans, San Francisco, Los Angeles, Orange County and San Diego.

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