Sunstone Hotel Investors (NYSE: SHO) and Chatham Lodging Trust (NYSE:CLDT) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Dividends

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Sunstone Hotel Investors pays an annual dividend of $2.32 per share and has a dividend yield of 14.9%. Chatham Lodging Trust pays an annual dividend of $1.32 per share and has a dividend yield of 6.2%. Sunstone Hotel Investors pays out 386.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust pays out 197.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chatham Lodging Trust has increased its dividend for 3 consecutive years.

Insider & Institutional Ownership

75.9% of Chatham Lodging Trust shares are held by institutional investors. 0.8% of Sunstone Hotel Investors shares are held by company insiders. Comparatively, 3.6% of Chatham Lodging Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Sunstone Hotel Investors and Chatham Lodging Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sunstone Hotel Investors $1.19 billion 2.94 $134.19 million $0.60 25.97
Chatham Lodging Trust $293.82 million 3.26 $31.48 million $0.67 31.54

Sunstone Hotel Investors has higher revenue and earnings than Chatham Lodging Trust. Sunstone Hotel Investors is trading at a lower price-to-earnings ratio than Chatham Lodging Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Sunstone Hotel Investors and Chatham Lodging Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunstone Hotel Investors 3 8 1 0 1.83
Chatham Lodging Trust 0 6 1 0 2.14

Sunstone Hotel Investors currently has a consensus target price of $15.94, indicating a potential upside of 2.29%. Chatham Lodging Trust has a consensus target price of $20.70, indicating a potential downside of 2.04%. Given Sunstone Hotel Investors’ higher probable upside, equities research analysts clearly believe Sunstone Hotel Investors is more favorable than Chatham Lodging Trust.

Profitability

This table compares Sunstone Hotel Investors and Chatham Lodging Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sunstone Hotel Investors 12.53% 5.56% 3.56%
Chatham Lodging Trust 9.03% 3.90% 2.04%

Volatility & Risk

Sunstone Hotel Investors has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Chatham Lodging Trust has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is to acquire, own, asset manage and renovate primarily urban and resort upper upscale hotels in the United States. The Company operates through hotel ownership segment. The Company 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 January 10, 2018, the Company has interest in 25 hotels, including 12,450 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.

About Chatham Lodging Trust

Chatham Lodging Trust is a real estate investment trust. The Company invests primarily in upscale extended-stay and premium-branded select-service hotels. All of the Company’s assets are held by, and all of its operations are conducted through Chatham Lodging, L.P. (the Operating Partnership). The Company owned 41 hotels with an aggregate of 6,163 rooms located in 16 states and the District of Columbia. The Company’s hotels included upscale extended-stay hotels that operate under the Residence Inn by Marriott brand (15 hotels) and Homewood Suites by Hilton brand (nine hotels), as well as premium-branded select-service hotels that operate under the Courtyard by Marriott brand (four hotels), the Hampton Inn or Hampton Inn and Suites by Hilton brand (three hotels), the Hilton Garden Inn by Hilton brand (three hotels), the SpringHill Suites by Marriott brand (two hotels) and the Hyatt Place brand (two hotels).

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