Ashford Hospitality Trust (NYSE: AHT) and Chatham Lodging Trust (REIT) (NYSE:CLDT) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitabiliy and risk.

Dividends

Ashford Hospitality Trust pays an annual dividend of $0.48 per share and has a dividend yield of 7.6%. Chatham Lodging Trust (REIT) pays an annual dividend of $1.32 per share and has a dividend yield of 6.5%. Ashford Hospitality Trust pays out -35.8% of its earnings in the form of a dividend. Chatham Lodging Trust (REIT) pays out 200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust (REIT) has increased its dividend for 2 consecutive years. Ashford Hospitality Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ashford Hospitality Trust and Chatham Lodging Trust (REIT)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ashford Hospitality Trust -5.43% -10.36% -1.63%
Chatham Lodging Trust (REIT) 8.73% 3.76% 1.97%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Ashford Hospitality Trust and Chatham Lodging Trust (REIT), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ashford Hospitality Trust 0 3 3 0 2.50
Chatham Lodging Trust (REIT) 0 3 0 0 2.00

Ashford Hospitality Trust currently has a consensus price target of $7.54, indicating a potential upside of 19.52%. Chatham Lodging Trust (REIT) has a consensus price target of $19.75, indicating a potential downside of 3.38%. Given Ashford Hospitality Trust’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Ashford Hospitality Trust is more favorable than Chatham Lodging Trust (REIT).

Institutional & Insider Ownership

72.1% of Ashford Hospitality Trust shares are held by institutional investors. Comparatively, 82.8% of Chatham Lodging Trust (REIT) shares are held by institutional investors. 18.2% of Ashford Hospitality Trust shares are held by company insiders. Comparatively, 3.6% of Chatham Lodging Trust (REIT) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Ashford Hospitality Trust and Chatham Lodging Trust (REIT)’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ashford Hospitality Trust $1.47 billion 0.42 $406.42 million ($1.34) -4.71
Chatham Lodging Trust (REIT) $290.08 million 2.76 $106.90 million $0.66 30.97

Ashford Hospitality Trust has higher revenue and earnings than Chatham Lodging Trust (REIT). Ashford Hospitality Trust is trading at a lower price-to-earnings ratio than Chatham Lodging Trust (REIT), indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Ashford Hospitality Trust has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500. Comparatively, Chatham Lodging Trust (REIT) has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Summary

Ashford Hospitality Trust beats Chatham Lodging Trust (REIT) on 9 of the 16 factors compared between the two stocks.

Ashford Hospitality Trust Company Profile

Ashford Hospitality Trust, Inc. is an externally-advised real estate investment trust (REIT). The Company is focused on investing in the hospitality industry with a focus on full-service upscale and upper-upscale hotels in the United States. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership (Ashford Trust OP), its operating partnership. The Company’s portfolio consists of 121 properties with over 25000 rooms; 86 hotel condominium units at WorldQuest Resort in Orlando, Florida; a 96.6% ownership in Ashford Quantitative Alternatives (U.S.), LP (the AQUA U.S. Fund); a 29.7% ownership in Ashford Inc., and a 13.3% ownership in OpenKey.

Chatham Lodging Trust (REIT) 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). As of December 31, 2016, the Company owned 38 hotels with an aggregate of 5,712 rooms located in 15 states and the District of Columbia. As of December 31, 2016, 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).

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