Critical Review: Ashford Hospitality Prime (AHP) & Sotherly Hotels (SOHO)
Ashford Hospitality Prime (NYSE: AHP) and Sotherly Hotels (NASDAQ:SOHO) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.
Valuation and Earnings
This table compares Ashford Hospitality Prime and Sotherly Hotels’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Ashford Hospitality Prime||$405.86 million||0.72||$19.31 million||($0.28)||-32.50|
|Sotherly Hotels||$152.85 million||0.59||$920,000.00||($0.01)||-652.35|
Ashford Hospitality Prime has higher revenue and earnings than Sotherly Hotels. Sotherly Hotels is trading at a lower price-to-earnings ratio than Ashford Hospitality Prime, indicating that it is currently the more affordable of the two stocks.
This table compares Ashford Hospitality Prime and Sotherly Hotels’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ashford Hospitality Prime||-0.36%||-0.43%||-0.11%|
Insider and Institutional Ownership
69.6% of Ashford Hospitality Prime shares are owned by institutional investors. Comparatively, 26.4% of Sotherly Hotels shares are owned by institutional investors. 10.0% of Ashford Hospitality Prime shares are owned by insiders. Comparatively, 13.8% of Sotherly Hotels shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Ashford Hospitality Prime pays an annual dividend of $0.64 per share and has a dividend yield of 7.0%. Sotherly Hotels pays an annual dividend of $0.44 per share and has a dividend yield of 6.7%. Ashford Hospitality Prime pays out -228.6% of its earnings in the form of a dividend. Sotherly Hotels pays out -4,395.6% 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. Ashford Hospitality Prime has increased its dividend for 2 consecutive years. Ashford Hospitality Prime is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Ashford Hospitality Prime has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, Sotherly Hotels has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.
This is a summary of current ratings and price targets for Ashford Hospitality Prime and Sotherly Hotels, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ashford Hospitality Prime||0||3||3||0||2.50|
Ashford Hospitality Prime presently has a consensus target price of $13.40, suggesting a potential upside of 47.25%. Sotherly Hotels has a consensus target price of $8.00, suggesting a potential upside of 22.51%. Given Ashford Hospitality Prime’s higher possible upside, equities analysts plainly believe Ashford Hospitality Prime is more favorable than Sotherly Hotels.
Ashford Hospitality Prime beats Sotherly Hotels on 9 of the 16 factors compared between the two stocks.
Ashford Hospitality Prime Company Profile
Ashford Hospitality Prime, Inc. invests in high revenue per available room (RevPAR), luxury hotels and resorts. The Company conducts its business and owns all of its assets through its operating partnership, Ashford Hospitality Prime Limited Partnership (Ashford Prime OP). The Company operates in the direct hotel investment segment of the hotel lodging industry. As of February 24, 2017, it owned interests in 11 hotel properties in six states, the District of Columbia and St. Thomas, the United States Virgin Islands with 3,702 total rooms, or 3,467 net rooms, excluding those attributable to its joint venture partner. The hotel properties in its portfolio are mainly located in the Unites States urban markets. The Company owns nine of its hotel properties directly, and the remaining two hotel properties through an investment in a majority-owned consolidated entity. All of the hotels in the Company’s portfolio are asset-managed by Ashford Hospitality Advisors LLC.
Sotherly Hotels Company Profile
Sotherly Hotels Inc. is a self-managed and self-administered lodging real estate investment trust. The Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States. The Company operates through the hotel ownership segment. The Company conducts its operations through Sotherly Hotels LP, its Operating Partnership, of which the Company is the general partner. Its portfolio consists of approximately 10 full-service, mainly upscale and upper-upscale hotels located in over eight states with an aggregate of approximately 3,010 rooms and approximately 160,930 square feet of meeting space. All of these hotels are owned by subsidiaries of the Operating Partnership, approximately 10 operate under the Hilton, Crowne Plaza, DoubleTree and Sheraton brands, one is an independent hotel, and all are managed on a day to day basis by MHI Hotels Services, LLC, which does business as Chesapeake Hospitality.
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