MGM Growth Properties (NYSE: MGP) and Sunstone Hotel Investors (NYSE:SHO) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Volatility & Risk

MGM Growth Properties has a beta of -1.31, suggesting that its stock price is 231% less volatile than the S&P 500. Comparatively, Sunstone Hotel Investors has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Dividends

MGM Growth Properties pays an annual dividend of $1.58 per share and has a dividend yield of 5.1%. Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. MGM Growth Properties pays out 205.2% 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 25.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings and price targets for MGM Growth Properties and Sunstone Hotel Investors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGM Growth Properties 0 1 4 0 2.80
Sunstone Hotel Investors 3 5 2 0 1.90

MGM Growth Properties currently has a consensus price target of $31.20, suggesting a potential downside of 0.06%. Sunstone Hotel Investors has a consensus price target of $15.56, suggesting a potential downside of 1.05%. Given MGM Growth Properties’ stronger consensus rating and higher probable upside, research analysts clearly believe MGM Growth Properties is more favorable than Sunstone Hotel Investors.

Earnings and Valuation

This table compares MGM Growth Properties and Sunstone Hotel Investors’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MGM Growth Properties $725.00 million 2.48 $613.53 million $0.77 40.55
Sunstone Hotel Investors $1.19 billion 2.98 $344.05 million $0.78 20.15

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

Profitability

This table compares MGM Growth Properties and Sunstone Hotel Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGM Growth Properties 6.21% 0.81% 0.48%
Sunstone Hotel Investors 15.41% 7.70% 4.91%

Summary

Sunstone Hotel Investors beats MGM Growth Properties on 8 of the 14 factors compared between the two stocks.

About MGM Growth Properties

MGM Growth Properties LLC is a real estate investment trust engaged in the acquisition, ownership and leasing of destination entertainment and leisure resorts, whose amenities include casino gaming, hotel, convention, dining, entertainment and retail offerings. Its portfolio consists of approximately 10 destination resorts. It has over six entertainment and gaming-related properties located on the Las Vegas Strip, including Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor and Excalibur, and The Park, a dining and entertainment complex located between New York-New York and Monte Carlo. Outside of Las Vegas, it owns over four casino resort properties, including MGM Grand Detroit in Detroit, Michigan, Borgata Hotel Casino & Spa in Atlantic City, New Jersey, and Beau Rivage and Gold Strike Tunica, both of which are located in Mississippi. It operates approximately 27,330 hotel rooms, over 200 restaurants, approximately 100 retail outlets and over 20 entertainment venues.

About Sunstone Hotel Investors

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‚Äôs 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.

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