Head-To-Head Comparison: Hyatt Hotels (H) and Sunstone Hotel Investors (SHO)

Hyatt Hotels (NYSE: H) and Sunstone Hotel Investors (NYSE:SHO) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, risk, institutional ownership, valuation, analyst recommendations and dividends.

Profitability

This table compares Hyatt Hotels and Sunstone Hotel Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hyatt Hotels 12.81% 4.39% 2.13%
Sunstone Hotel Investors 10.28% 4.41% 2.83%

Volatility and Risk

Hyatt Hotels has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Insider & Institutional Ownership

38.3% of Hyatt Hotels shares are owned by institutional investors. 18.4% of Hyatt Hotels shares are owned by company insiders. Comparatively, 0.8% of Sunstone Hotel Investors shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Hyatt Hotels and Sunstone Hotel Investors’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hyatt Hotels $4.69 billion 2.00 $249.00 million $1.78 45.00
Sunstone Hotel Investors $1.19 billion 3.21 $145.37 million $1.22 13.91

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Hyatt Hotels and Sunstone Hotel Investors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hyatt Hotels 0 6 9 0 2.60
Sunstone Hotel Investors 1 7 3 0 2.18

Hyatt Hotels presently has a consensus target price of $82.15, suggesting a potential upside of 2.56%. Sunstone Hotel Investors has a consensus target price of $16.81, suggesting a potential downside of 0.93%. Given Hyatt Hotels’ stronger consensus rating and higher probable upside, research analysts plainly believe Hyatt Hotels is more favorable than Sunstone Hotel Investors.

Dividends

Hyatt Hotels pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Hyatt Hotels pays out 33.7% of its earnings in the form of a dividend. Sunstone Hotel Investors pays out 16.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sunstone Hotel Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Hyatt Hotels beats Sunstone Hotel Investors on 11 of the 16 factors compared between the two stocks.

Hyatt Hotels Company Profile

Hyatt Hotels Corporation, a hospitality company, develops, owns, operates, manages, franchises, licenses, or provides services to hotels, resorts, residential, and other properties. It operates in four segments: Owned and Leased Hotels, Americas Management and Franchising, ASPAC Management and Franchising, and EAME/SW Asia Management and Franchising. The company operates its properties under the Hyatt, Park Hyatt, Miraval, Grand Hyatt, Hyatt Regency, Andaz, Hyatt Centric, The Unbound Collection by Hyatt, Hyatt Place, Hyatt House, Hyatt Ziva, Hyatt Zilara, echale, Hyatt Residence Club, Hyatt Residences, World of Hyatt, and Hyatt Resorts brands and trademarks. As of March 31, 2018, its portfolio consisted of approximately 700 properties in 50 countries. It primarily serves corporations; national, state, and regional associations; specialty market accounts, including social, government, military, educational, religious, and fraternal accounts; travel organizations; and a group of individual consumers. Hyatt Hotels Corporation has a strategic development agreement with Tianfu Minyoun Hospitality for the expansion of Hyatt Place and Hyatt House hotels in China. The company was formerly known as Global Hyatt Corporation and changed its name to Hyatt Hotels Corporation in June 2009. Hyatt Hotels Corporation was founded in 1957 and is headquartered in Chicago, Illinois.

Sunstone Hotel Investors Company Profile

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of May 7, 2018 has interests in 25 hotels comprised of 12,450 rooms. Sunstone's hotels are primarily in the urban and resort upper upscale segment and are predominantly operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone's website at www.sunstonehotels.com.

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