Critical Review: Sunstone Hotel Investors (SHO) and Summit Hotel Properties (INN)
Sunstone Hotel Investors (NYSE: SHO) and Summit Hotel Properties (NYSE:INN) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.
This table compares Sunstone Hotel Investors and Summit Hotel Properties’ 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%|
|Summit Hotel Properties||21.97%||9.89%||5.83%|
This is a breakdown of recent recommendations for Sunstone Hotel Investors and Summit Hotel Properties, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sunstone Hotel Investors||2||5||2||0||2.00|
|Summit Hotel Properties||1||1||6||0||2.63|
Sunstone Hotel Investors currently has a consensus price target of $16.13, suggesting a potential downside of 1.80%. Summit Hotel Properties has a consensus price target of $17.43, suggesting a potential upside of 10.03%. Given Summit Hotel Properties’ stronger consensus rating and higher possible upside, analysts clearly believe Summit Hotel Properties is more favorable than Sunstone Hotel Investors.
Institutional and Insider Ownership
95.3% of Summit Hotel Properties shares are held by institutional investors. 0.8% of Sunstone Hotel Investors shares are held by insiders. Comparatively, 1.7% of Summit Hotel Properties shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Sunstone Hotel Investors pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Summit Hotel Properties pays an annual dividend of $0.68 per share and has a dividend yield of 4.3%. Sunstone Hotel Investors pays out 25.6% of its earnings in the form of a dividend. 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. Sunstone Hotel Investors has increased its dividend for 3 consecutive years.
Valuation and Earnings
This table compares Sunstone Hotel Investors and Summit Hotel Properties’ top-line 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||3.11||$344.05 million||$0.78||21.05|
|Summit Hotel Properties||$475.70 million||3.47||$154.58 million||$0.90||17.60|
Sunstone Hotel Investors has higher revenue and earnings than Summit Hotel Properties. Summit Hotel Properties 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, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, Summit Hotel Properties has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.
Summit Hotel Properties beats Sunstone Hotel Investors on 12 of the 17 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.
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 79 hotels with a total of 11,590 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.
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