Comparing Hospitality Properties Trust (HPT) & DiamondRock Hospitality (DRH)

Hospitality Properties Trust (NASDAQ: HPT) and DiamondRock Hospitality (NYSE:DRH) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Dividends

Hospitality Properties Trust pays an annual dividend of $2.08 per share and has a dividend yield of 7.6%. DiamondRock Hospitality pays an annual dividend of $0.50 per share and has a dividend yield of 4.4%. Hospitality Properties Trust pays out 148.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality pays out 111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Hospitality Properties Trust and DiamondRock Hospitality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hospitality Properties Trust $2.05 billion 2.20 $223.11 million $1.40 19.59
DiamondRock Hospitality $896.56 million 2.56 $114.79 million $0.45 25.49

Hospitality Properties Trust has higher revenue and earnings than DiamondRock Hospitality. Hospitality Properties Trust is trading at a lower price-to-earnings ratio than DiamondRock Hospitality, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Hospitality Properties Trust and DiamondRock Hospitality, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hospitality Properties Trust 1 3 4 0 2.38
DiamondRock Hospitality 0 3 7 0 2.70

Hospitality Properties Trust presently has a consensus target price of $31.71, indicating a potential upside of 15.66%. DiamondRock Hospitality has a consensus target price of $12.00, indicating a potential upside of 4.62%. Given Hospitality Properties Trust’s higher probable upside, research analysts plainly believe Hospitality Properties Trust is more favorable than DiamondRock Hospitality.

Profitability

This table compares Hospitality Properties Trust and DiamondRock Hospitality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hospitality Properties Trust 11.66% 8.79% 3.58%
DiamondRock Hospitality 10.47% 4.97% 2.95%

Insider & Institutional Ownership

75.7% of Hospitality Properties Trust shares are held by institutional investors. 1.6% of Hospitality Properties Trust shares are held by company insiders. Comparatively, 1.1% of DiamondRock Hospitality shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Hospitality Properties Trust has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, DiamondRock Hospitality has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500.

Summary

Hospitality Properties Trust beats DiamondRock Hospitality on 10 of the 16 factors compared between the two stocks.

Hospitality Properties Trust Company Profile

Hospitality Properties Trust is a real estate investment trust. The Company’s segments include hotel investments, travel center investments and corporate. As of December 31, 2016, the Company owned 306 hotels with 46,583 rooms or suites, and 198 travel centers. As of December 31, 2016, the Company’s properties were located in 45 states in the United States, Canada and Puerto Rico. As of December 31, 2016, the Company’s hotels were operated as Courtyard by Marriott, Royal Sonesta, Sonesta Hotels & Resorts, Candlewood Suites, Residence Inn by Marriott, Sonesta ES Suites, Crowne Plaza Hotels & Resorts, Staybridge Suites, Hyatt Place, Wyndham Grand, Wyndham Hotels & Resorts, InterContinental Hotels & Resorts, Marriott Hotels and Resorts, the Clift Hotel, Radisson Hotels & Resorts, Kimpton Hotels & Restaurants, TownePlace Suites by Marriott, Hawthorn Suites, Country Inns & Suites by Carlson, Holiday Inn Hotels & Resorts, SpringHill Suites by Marriott, and Park Plaza Hotels & Resorts.

DiamondRock Hospitality Company Profile

DiamondRock Hospitality Company is a real estate investment trust (REIT). As of December 31, 2016, the Company owned a portfolio of 26 hotels and resorts that contains 9,472 guest rooms located in 17 different markets in North America and the United States Virgin Islands. Its business is to acquire, own, asset manage and renovate hotel properties in the United States. Its portfolio is concentrated in gateway cities and destination resort locations. It conducts its business through an umbrella partnership REIT (UPREIT) in, which its hotels are owned by subsidiaries of its operating partnership, DiamondRock Hospitality Limited Partnership. The Company is the general partner of its operating partnership and owns, either directly or indirectly, all of the limited partnership units of its operating partnership. The Company leases all of its domestic hotels to taxable REIT subsidiary, Bloodstone TRS, Inc. (TRS) lessees.

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