Summit Hotel Properties (NYSE: INN) and Hersha Hospitality Trust (NYSE:HT) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitabiliy, earnings and institutional ownership.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Summit Hotel Properties $475.70 million 3.59 $153.57 million $0.90 18.19
Hersha Hospitality Trust $471.75 million 1.64 $138.69 million $2.30 8.04

Summit Hotel Properties has higher revenue and earnings than Hersha Hospitality Trust. Hersha Hospitality 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.

Dividends

Summit Hotel Properties pays an annual dividend of $0.68 per share and has a dividend yield of 4.2%. Hersha Hospitality Trust pays an annual dividend of $1.12 per share and has a dividend yield of 6.1%. Summit Hotel Properties pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hersha Hospitality Trust pays out 48.7% of its earnings in the form of a dividend. Summit Hotel Properties has increased its dividend for 3 consecutive years and Hersha Hospitality Trust has increased its dividend for 3 consecutive years. Hersha Hospitality Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Summit Hotel Properties and Hersha Hospitality Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summit Hotel Properties 21.97% 9.89% 5.83%
Hersha Hospitality Trust 22.77% 14.78% 6.13%

Risk & Volatility

Summit Hotel Properties has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, Hersha Hospitality Trust has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Summit Hotel Properties and Hersha Hospitality Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summit Hotel Properties 0 1 6 0 2.86
Hersha Hospitality Trust 1 5 2 0 2.13

Summit Hotel Properties presently has a consensus price target of $18.33, indicating a potential upside of 11.99%. Hersha Hospitality Trust has a consensus price target of $20.13, indicating a potential upside of 8.78%. Given Summit Hotel Properties’ stronger consensus rating and higher possible upside, research analysts plainly believe Summit Hotel Properties is more favorable than Hersha Hospitality Trust.

Insider & Institutional Ownership

88.0% of Summit Hotel Properties shares are owned by institutional investors. Comparatively, 96.6% of Hersha Hospitality Trust shares are owned by institutional investors. 1.9% of Summit Hotel Properties shares are owned by company insiders. Comparatively, 8.1% of Hersha Hospitality Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Hersha Hospitality Trust beats Summit Hotel Properties on 9 of the 16 factors compared between the two stocks.

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 81 hotels with a total of 11,608 guestrooms located in 24 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 92% 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.

Hersha Hospitality Trust Company Profile

Hersha Hospitality Trust is a self-advised real estate investment trust (REIT). The Company invests primarily in institutional grade hotels in urban gateway markets, including New York, Washington, District of Columbia, Boston, Philadelphia, South Florida and select markets on the West Coast. As of July 20, 2017, the Company’s hotels included 51 hotels totaling 7,804 rooms located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company’s property brands include Marriott International, Hilton Hotels, Hyatt Hotels, Intercontinental Hotel Group, Wyndham Hotels and Hersha’s Independent Hotel Collection.

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