Sunstone Hotel Investors (SHO) & Apple Hospitality REIT (APLE) Critical Review
Apple Hospitality REIT (NYSE: APLE) and Sunstone Hotel Investors (NYSE:SHO) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitabiliy, institutional ownership, risk and dividends.
Risk & Volatility
Apple Hospitality REIT has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.
Institutional and Insider Ownership
47.8% of Apple Hospitality REIT shares are held by institutional investors. 6.4% of Apple Hospitality REIT 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, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares Apple Hospitality REIT and Sunstone Hotel Investors’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Apple Hospitality REIT||$1.11 billion||3.90||$394.91 million||$0.72||26.93|
|Sunstone Hotel Investors||$1.20 billion||3.04||$345.84 million||$0.83||19.94|
Apple Hospitality REIT has higher revenue, but lower earnings than Sunstone Hotel Investors. Sunstone Hotel Investors 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.
This is a breakdown of recent recommendations and price targets for Apple Hospitality REIT and Sunstone Hotel Investors, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Apple Hospitality REIT||1||3||1||0||2.00|
|Sunstone Hotel Investors||3||7||2||0||1.92|
Apple Hospitality REIT presently has a consensus price target of $18.50, suggesting a potential downside of 4.59%. Sunstone Hotel Investors has a consensus price target of $15.00, suggesting a potential downside of 9.37%. Given Apple Hospitality REIT’s stronger consensus rating and higher possible upside, analysts plainly believe Apple Hospitality REIT is more favorable than Sunstone Hotel Investors.
This table compares Apple Hospitality REIT and Sunstone Hotel Investors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Apple Hospitality REIT||13.01%||4.38%||3.09%|
|Sunstone Hotel Investors||16.42%||8.31%||5.26%|
Apple Hospitality REIT pays an annual dividend of $1.20 per share and has a dividend yield of 6.2%. Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Apple Hospitality REIT pays out 166.7% 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 24.1% of its earnings in the form of a dividend.
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 December 31, 2016, the Company owned 235 hotels with an aggregate of 30,073 rooms located in urban, suburban and developing markets throughout 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.
Sunstone Hotel Investors Company Profile
Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered real estate investment trust. The Company’s primary business is to acquire, own, asset manage and renovate primarily urban and resort upper upscale hotels in the United States. It operates through hotel ownership segment. It owns primarily urban and resort upper upscale hotels in the United States. As of December 31, 2016, the Company had interests in 27 hotels. Of the 27 hotels, the Company classifies 24 as upper upscale, two as upscale and one as luxury. All but one (the Boston Park Plaza) of its 27 hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. As of December 31, 2016, the hotels consisting of 27 hotel portfolio averaged 490 rooms in size. 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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