Critical Survey: Sunstone Hotel Investors (SHO) versus FelCor Lodging Trust (FCH)
Sunstone Hotel Investors (NYSE: SHO) and FelCor Lodging Trust (NYSE:FCH) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.
This is a summary of recent ratings for Sunstone Hotel Investors and FelCor Lodging Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sunstone Hotel Investors||3||5||2||0||1.90|
|FelCor Lodging Trust||0||2||1||0||2.33|
Sunstone Hotel Investors currently has a consensus target price of $15.56, indicating a potential downside of 0.03%. FelCor Lodging Trust has a consensus target price of $7.25, indicating a potential downside of 0.68%. Given Sunstone Hotel Investors’ higher possible upside, research analysts clearly believe Sunstone Hotel Investors is more favorable than FelCor Lodging Trust.
This table compares Sunstone Hotel Investors and FelCor Lodging Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sunstone Hotel Investors||15.41%||7.70%||4.91%|
|FelCor Lodging Trust||-5.15%||-25.32%||-1.92%|
Insider and Institutional Ownership
78.8% of FelCor Lodging Trust shares are owned by institutional investors. 0.8% of Sunstone Hotel Investors shares are owned by company insiders. Comparatively, 3.3% of FelCor Lodging Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Sunstone Hotel Investors and FelCor Lodging Trust’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sunstone Hotel Investors||$1.19 billion||2.95||$344.05 million||$0.78||19.95|
|FelCor Lodging Trust||$828.93 million||1.22||$207.52 million||($0.49)||-14.90|
Sunstone Hotel Investors has higher revenue and earnings than FelCor Lodging Trust. FelCor Lodging Trust is trading at a lower price-to-earnings ratio than Sunstone Hotel Investors, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Sunstone Hotel Investors has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, FelCor Lodging Trust has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500.
Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. FelCor Lodging Trust pays an annual dividend of $0.24 per share and has a dividend yield of 3.3%. Sunstone Hotel Investors pays out 25.6% of its earnings in the form of a dividend. FelCor Lodging Trust pays out -49.0% 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 has increased its dividend for 2 consecutive years. FelCor Lodging Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Sunstone Hotel Investors beats FelCor Lodging Trust on 10 of the 16 factors compared between the two stocks.
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. The Company’s hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. As of July 26, 2017 the Company has interest in 27 hotels, including 13,202 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.
FelCor Lodging Trust Company Profile
FelCor Lodging Trust Incorporated is a real estate investment trust (REIT). The Company, through its subsidiary, FelCor Lodging Limited Partnership, held ownership interests in 39 hotels with 11,500 rooms, as of December 31, 2016. The Company sells, acquires, rebrands and redevelops hotels. As of December 31, 2016, the Company’s hotels were located in 14 states of the United States. The Company holds a portfolio of hotels managed by Hilton Worldwide (Hilton); Wyndham Worldwide (Wyndham); Marriott International Inc. (Marriott); InterContinental Hotels Group (IHG); AccorHotels Group, Highgate Hotels (Highgate), SBE and Aimbridge Hospitality. The Company’s hotels include Embassy Suites Atlanta-Buckhead; DoubleTree Suites by Hilton Austin; Embassy Suites Birmingham; The Fairmont Copley Plaza, Boston; Wyndham Boston Beacon Hill; Embassy Suites Boston-Marlborough, and Sheraton Burlington Hotel & Conference Center.
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